There is a new year upon us, but there has been little change in the rice market — and that’s not a bad thing. The assumptions that the industry has been working with on a short crop and lower yields have been finalized in several USDA reports that we highlight below. The domestic business has held steady, and the new year was greeted with a perk from Iraq and their announcement to procure an additional 44,000 metric tons. This will help exports get back on track, as the numbers have been dismal so far this marketing year because of the difficult — albeit recovering —a situation in Haiti.
The most recent WASDE report published on January 12 offers an outlook for the U.S. that calls for smaller supplies, higher domestic use, decreased exports, and lower ending stocks. The Crop Production Summary report for rice provides the evidence, citing that rice production in 2022 totaled 160 million cwt, down 16% from 2021. Planted area for 2022 was 2.22 million acres, down 12% from 2021. The area harvested was down 13% from last year, registering at 2.17 million acres. The average yield for all U.S. rice was estimated at 7,383 pounds/acre, down 4% from last year. None of this comes as a surprise to the industry, but these numbers are confirmation.
Turning to the global outlook from the WASDE, we see the opposite taking place with larger supplies available, reduced consumption overall, and increased trade, all resulting in higher ending stocks this month. All of these totals represent minor changes in the global complex, but nonetheless highlight a changing dynamic in China, India, the Philippines, and Pakistan.
The Rice Stocks report, also published on January 12, shows that rough rice stocks in all positions on December 1, 2022 totaled 106 million cwt, down 17% from the same time last year. On-farm stocks totaled 29.7 million cwt, and off-farm stocks were the remaining 76.1 million cwt. Long Grain varieties account for 72% of stocks, while medium grain accounted for 26%, and the remainder of 2% is for short grain varieties. This report helps provide support for the high price of U.S. rice. All eyes will be on the results of the January 23 tender in Colombia for U.S. rice under the Free Trade Agreement that calls for 89,779 tons milled basis and a shipment period of February 1 – June 30.
The biggest news out of Mexico is the government’s announcement on January 6 declaring the exemption of all import duties on food imports including rice in all forms as part of an effort to control food inflation. The decree, “Comunicado No. 001” states this anti-inflationary measure will remain in effect until December 31, 2023. We understand other Latin American governments are in similar policy discussions. Read more here.
In the Mercosur, Paraguay began harvesting the first fields last week. Brazilian buyers have been aggressively buying in the neighboring markets. The Mercosur countries are largely sold out of rough rice except for Brazil’s limited volume priced approximately at $415-$420/ton FOB. The trade also reports a sale of 60,000 tons of milled rice to Iraq out of Argentina and Uruguay in 50 kilo bags for March & April shipments of 30,000 tons each. Prices are reported at $565-$575.
Turning to Asia, prices have held steady in India at prices just below $400 pmt, and steady in Vietnam as well as prices around $455pmt. However, there was an increase in Thai prices up to the $490 pmt price point, largely on account of strong demand surfacing at the start of the year.
The weekly USDA Export Sales report shows net sales of 62,700 MT, up 29% from the four-week average and up noticeably from last week. Increases were primarily for South Korea (34,100 MT), Haiti (13,400 MT, including decreases of 3,600 MT), Jordan (8,000 MT), Honduras (5,100 MT), and Mexico (900 MT). Exports of 20,500 MT were down 59% from last week and 44% from the prior 4-week average. The destinations were primarily Haiti (15,100 MT), Mexico (2,200 MT), Canada (1,500 MT), Saudi Arabia (500 MT), and South Korea (400 MT).
Next week we will delve more deeply into intentions for new crop planting in the U.S., as those decisions are being made right now.