Despite rice producers being in the craziness of harvest, the market is experiencing what could be described as a calm before the storm. Truckers, driers, and farmers are dealing with the constant stress of getting the crop in the barn while the market is in a “wait and see” mode with significant global events swirling in the distance. The industry is well aware of the Indian export ban and red-hot Asian prices, but the direct impact of these food security concerns leaking into the Western Hemisphere is yet to be realized.

A significant reality that has snuck under the radar thus far, though, is that the South American crop is largely sold at this point — leaving the U.S. as the only origin for supplies in the Western Hemisphere for the next six months in a market desperate for available supplies. Mercosur, our largest competition in recent years, is essentially sold out. There are even rumors of Brazil booking a cargo of U.S. rice at the end of this calendar year! It has seemed unfathomable to consider sending rice to Brazil because in recent years of the small crop size to start, but also because Brazil has been the beneficiary of U.S. loss in market share to our core markets. How a year can change the dynamic (or the expected dynamic because nothing has technically happened to us yet in the Western Hemisphere). Things are setting up to be quite exciting. Even now, paddy quoted FOB NOLA at $415 when the price was expected to be $380 at this time. This can certainly be an answer to the higher cost of inputs the war in Ukraine has imposed on producers in the two most recent crop cycles.

With Arkansas now largely underway and reported at 24% harvested, all hopes are hanging on better field and milling yields than what we’re getting out of Texas and Louisiana. The hope was that a large crop and high yields would result in a significant supply of competitively priced rice. Unfortunately, those acres (at least from Texas and Louisiana) aren’t translating into the quality of milled rice the optimists were hoping for, thereby cutting the effective acreage expectations. Louisiana is at 86% harvested and Texas is at 80%. Mississippi is now beyond 30%, while Missouri is only at 5%. Harvesters are just getting in the fields in California for some of the specialty varieties and early-maturing medium grains. 70% of the crop is in good to excellent condition this week, down only 3% from last week. The rice industry will be looking for next week’s USDA WASDE report, scheduled to be released on Tuesday, September 12 at 12:00 pm Eastern Time. In the August WASDE report the 2022-23 carryover was raised a million hundredweights to 16.8 million. The report estimated the carryover for 2023-24 up three million at 19.6 million.

A quick summary of Asia tells us that Thai rice is settling around $650 pmt, with Viet rice very close—maybe closer to $645 pmt. El Niño is creating problems in Thailand, where dry conditions are forcing farmers to plant alternative crops to rice and the government is encouraging them to do so. The United Arab Emirates has suspended rice exports for the next four months, as has Myanmar. Indonesia has announced its desire to increase its buffer stocks but will be difficult to do because so many countries are closing up. Climate risk is becoming a significant factor in food procurement strategies for countries that rely on food imports. Domestic food inflation is a key factor as well. Right now, we see these two phenomena working together in the East and the West to create a tenuous market dynamic that will require creativity, government intervention, and cooperation to overcome.