Market Update: Farmers Focused on Demand and Carryover Stocks in Today’s USDA Report

March 22, 2024
It never ceases to amaze how quickly planting sneaks up each year, but we are officially underway for the new crop growing season. While we don’t have an official Crop Progress report from the USDA, it would show its first percentages in Texas and even Louisiana. On the other hand, California still has weeks to go before its first plantings, and they could be delayed even further if the wet spring weather continues. Ground work is underway where available, and expectations for a large crop are not hampering current price expectations in the long grain market.
Today’s USDA Supply/Demand Report (WASDE) is scheduled to be released at 12:05 pm ET. The February WASDE report lowered the 23-24 carryover stocks 1 million cwt to 23 million. The average price at $16 was unchanged. The main question in today’s report will be about demand and if carryover is lowered significantly. The report can be found here later today.
When looking at prices on the ground, pricing is firm in all markets except California medium grain. It is a truly rare day when we see U.S. #2 long grain milled rice going for the same price as U.S. #1 California medium grain, but here we are; both varieties are priced at $800 pmt. The return to a normal size crop of 500,000 acres in California has doubled the supply in a time when selling to the Middle East was a must. However, the logistical snarl resulting from the Houthi pirates has severely hampered Calrose distribution and therefore pricing. All that to say, we would caution any speculative medium grain plantings in the south this year.
Long grain prices remain firm both on the ground and in the export market. Rice in first hands in Texas is all but gone, while Louisiana remains just north of $18.50/cwt. Mississippi, Arkansas, and Missouri are all trading between $17.75-$18/cwt. To add more context to the situation to the price drop in California, it is difficult to even find a cash bid at $14/cwt over loan. Last year, cash prices were as high as $36/cwt over loan, and with several million cwt still in first hands in California with no current cash market, it will be a long summer for cash sellers.
Prices continue to be strong in Asia, with the most recent Indonesian tender finally finding a partner in Thailand. As a result, Thai prices bounced up about $10 pmt this week to $625 pmt, where Viet pricing is now hovering at $600 pmt. As for India, the elections are set for next month, and the Viet/Thai prices could look much different if it weren’t for the Indonesian purchases that have continued to breathe oxygen into the market. Indian rice export policy post-election has the power to deflate global prices or keep them afloat; we shall see. We would argue, however, that India’s G2G export exceptions actually help bring balance to the market and will be an aid to “breaking the fall” when the export ban is lifted.
The weekly USDA Export Sales report shows net sales of 84,600 MT this week, up 39% from the previous week, but down 4% from the prior 4-week average. Increases were primarily for Japan (17,900 MT), Mexico (15,400 MT), Haiti (13,500 MT), Guatemala (10,000 MT), and Honduras (10,000 MT). Exports of 101,600 MT were up 5% from the previous week and 12% from the prior 4-week average. The destinations were primarily to Panama (33,000 MT), Venezuela (27,500 MT), Japan (15,700 MT), Guatemala (7,200 MT), and Mexico (6,400 MT).
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