Steady as she goes can be the mantra this week. Harvest continues forward in Arkansas, where more field yields are coming in to substantiate the initial reports from last week. No big surprises with quality, but there is still optimism that it will increase as more milling reports come in. The Arkansas harvest should be passing 70% complete this weekend and will be on the downhill side of the season through October. Mississippi has pulled ahead and will be over 80% complete by this weekend. California is still lagging significantly because of the rain delay but should catch up quickly with clear skies in the forecast for the foreseeable future.

Paddy prices and the corresponding milled prices remain incredibly strong when compared to international competition; both from the Western Hemisphere and especially the Eastern Hemisphere. Paddy maintains firm pricing in Texas at $17.00/$19.00/cwt. Louisiana is strong at $18.00/cwt as well. Mississippi, Arkansas, and Missouri are all in the $16.00/$16.50/cwt range. The conundrum producers find themselves in is that inputs were so high this year, even with the firm paddy pricing, it doesn’t quite tip the scales in favor of liquidating supplies. However, when one converts these prices to milled FOB tonnage, it becomes apparent very quickly that selling is probably a good decision when looking at the price of the competition. Easier said than done when looking at the cost of production.

A simple comparison of pricing tells the story, but fortunately, the supply-driven market is enough to support the strong long grain prices in the U.S. for the time being. USA 5% is $725 FOB, 20% higher than Brazil 5%, priced at $580 pmt. Uruguay and Argentina are below that in the Western Hemisphere. Moving east, the prices separate even further, with U.S. 5% being 40% more expensive than Thai 5%. This typically isn’t a significant issue because the U.S. and Thailand don’t often share customers, but with Iraq in the wings, the U.S. industry wants to be as attractive as possible to attract more than the minimum 80,000 metric tons outlined in the MOU.

A recent GAIN report on Mexico predicts a slight upward revision in the production numbers to 263,000 metric tons of rough rice; the equivalent of 181,000 metric tons of milled rice. Consumption figures remain the same at 980,000 metric tons, necessitating imports in excess of 800,000 metric tons. While the U.S. used to supply most of this rice, the increased price has made Brazilian rice a much more favorable option. The market share that the US once enjoyed has slowly eroded over time, and there isn’t a reversal in the near term given current trajectories. This week in Brazil price indications for paddy rice at the Port of Rio Grande do Sul are in the $350-$355 per ton range depending on the currency exchange rate. Planting season continues throughout the Mercosur.

U.S. rough rice exports have slowed to a trickle compared to previous years while the domestic market shows strong demand.