Market Update: Export Outlook Unclear for U.S. Rice Farmers

March 31, 2023
The United States Trade Representative (USTR) made it very clear this week that trade agreements and tariff cutting are not on the Biden trade agenda. While this news is not new, it is a stark abandonment of one of the most effective tools the rice industry and the entire U.S. agricultural complex can utilize to compete in a global market. This is especially poor timing given the expiration of the CAFTA-DR trade agreement that has been fundamental in the structure of the importation of U.S. rice into Central and South America. A report this week put to rest any hope the agricultural interests have when U.S. Trade Representative Katherine Tai stated, “At this moment we do not have tariff liberalization negotiations going on with a partner.” The USRPA still strongly believes that trade agreements need to be pursued, because “free trade” doesn’t mean “fair trade,” and when other governments are over-subsidizing rice production, it puts the U.S. industry at a disadvantage.
The expiration of CAFTA-DR isn’t the only obstacle that the U.S. rice industry is facing, nor is it the only reason that exports have cratered nearly 40% this year. Another impact that has helped create this perfect storm is the policies many of our key export markets implemented to protect their citizens against soaring food inflation. These key markets in the Western Hemisphere, Mexico and El Salvador to name two, removed tariffs on rice imports to minimize the impact of food inflation, thereby putting the U.S. at a disadvantage. Add this to a politically volatile climate in Haiti, our key milled export market, and it’s no wonder exports have slumped. The smaller crop over the last three years has oddly helped this predicament, but with a new and larger crop expected this year, there is still hope for a positive outcome.
Turning to that optimism and planting of the new crop, cold weather has slowed the progress of the Louisiana crop a bit, but not to a detrimental level. Texas is also moving ahead, probably just now crossing the halfway point of being planted. Mississippi is getting optimistic about the size of its crop (at least compared to last year) with 110,000+ acres being likely. Arkansas and Missouri are looking up as well, but the picture will be much clearer in a few more weeks. The strong domestic market is hoping for a stable growing season to produce high-quality rice with solid milling out turns, and exporters want the same because they are expecting that with a larger crop will come more competitive pricing. There are a lot of moving pieces at the moment, but things will settle once planting is complete.
In Asia, prices rallied for a second straight week, specifically in Thailand where white 5% is now registering at $480 pmt, up from $465 pmt last week. Viet bumped as well, though not as much, up to $465 pmt from $460 pmt. There is strong demand in the eastern hemisphere, but the wild card will be India. Recall that we reported their rabi crop is much larger than expected—large enough to register another record crop. When these supplies come to market, the Indian government will have to re-evaluate its tariff program and its exportable supply. This could certainly shock the Thai and Viet prices, but until then, the market is firm.
USDA Prospective Plantings ReportUSDA Rice Stocks Report
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