| Harvest continues to produce solid results as we begin the new month. Texas is heading into its final stretch with Louisiana just behind, with perhaps 10% and 15% left to go respectively. This week will be the official “kick-off” of the Arkansas rice harvest where yields are looking to be at least average, hopefully, better. The USDA Crop Progress report is showing Arkansas at 4% harvested as of August 28, and we expect by this time next week to see a significant jump. Mississippi is on the same schedule as Arkansas, with 2% harvested to date, but a busy September is anticipated. California will see its first harvesters in the fields just after the Labor Day holiday and expects to be in full swing by the middle of September. Cash prices remain strong on the ground, with Texas showing staying power at $17.50-18.00 per cwt. Louisiana is showing much the same as last week at $17.30 per cwt, which is welcome news considering the price disparity in milled prices when compared to competitors. Arkansas will be the one to watch as harvest gets underway to see if being awash in new crops affects futures prices or deliveries in any way. The general sentiment is that it won’t be positive, as futures prices are pressing the upper range of domestic purchases, and there’s resistance against any further price growth. Tracking these changes has been difficult in recent weeks because of a problem with the USDA’s Export Sales reporting system. The USDA Export Sales reporting system was scheduled to roll out a new interface two weeks ago, but there was a technical glitch instead of the big reveal. A communication from the FAS Administrator states the industry can expect to be without Export Sales reports until at least September 15. This is an extremely important tool to help track S&D fundamentals and compare against previous years, as well as aid in price discovery for the coming year. However, not having access to the reports may save us the dismal news of poor sales since the start of the marketing year. Outside of the boost from the second tranche of rice procured by Iraq, the export business has been light. To that note, U.S. Long Grain 5% is quoted at $710 pmt. Compare that to prices of $580 in Brazil, $540 in Uruguay, and $500 in Argentina. The industry remains extremely fortunate for its steady domestic business, and in this case, another crop that was down 15% from historical norms at 1.755 million acres of long grain is expected to actually be harvested this year. The high cost of inputs has ravaged the economics of rice production this year for farmers, just as inflation has ravaged the checkbooks of consumers. Asia is holding steady as well, and the lack of volatility is a nice reprieve in the midst of so much global chaos. Thai 5% is steady around $425 pmt, Viet rice steady at $395 pmt, and Indian rice at $355 pmt. There was initial speculation that prices in Thailand could cool as they finish harvest, but the strong demand from Iraq for milled rice and demand from China for broken (for animal feed) has helped prop up prices even with flush supplies. The futures market has been surprisingly strong, but showed a drop in average daily volume of 42%, down to 1,149. Open interest was fairly steady, registering a 2% bump up to 9,043. |
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