Market Update: Growing Focus on U.S. Rice Crop's Yields & Quality

June 24, 2022

The refrain continues—a quiet market with little change. This isn’t a bad thing considering the convulsions the greater economy has experienced in recent weeks. While U.S. rice farmers have taken direct fire resulting from fertilizer and fuel costs, the market has somehow dodged much of the battle, with prices—albeit high—holding steady. The milled market remains quiet, focused solely on domestic foodservice customers, as milled exports are a distant hope given price disparities from other origins. Haiti, the primary milled customer, is in such disarray, it is difficult to bank any business in the short term.

Paddy exports are a different story though, as U.S. long grain remains competitive in this arena. Brazil has come on strong since Mexico and other Central American customers have reduced or removed import duties to fight food inflation, gobbling up nearly 400,000 metric tons of business in the last four months. In the first quarter, Mexico imported roughly 300,000 metric tons of rice, with the U.S. accounting for 225,000 metric tons, or about 75%. This is significantly lower than the same time last year, largely because U.S. prices have increased approximately 13% over the same time period.

On the ground, paddy prices remain firm on account of short supply. These supply driven markets, while favorable to farmers in the short term, often have a whipsaw effect when increased supply returns, as the only way to gain customers back is with price drops. We still have a long crop year to discover before we can make any educated guesses on crop size next year, but the lack of demand on the milled market doesn’t exactly balance with the price of product in the paddy market. Texas is still holding firm at $17/cwt, with Louisiana just below at $16.67/cwt. Mississippi, Arkansas, and Missouri are all $16.75/17.50, similar to last week.

In Asia, prices softened quite significantly in Thailand, dropping back down to the $430 pmt range, down nearly $10 pmt from last week. This would make sense given the currency valuation has been in flux with the Baht falling to 34.82 baht/$1.00, which is its weakest point since 2017. Thai prices have been outpacing Viet prices and Indian prices for weeks now. It would appear the higher prices were a reaction to Iraq gobbling up so much supply from this one origin—the market has now adjusted to that relationship, and prices are settling down a bit. It is also being reported that port congestion is easing, help grease the wheels to additional exports as well. Viet prices are down near $420 pmt, and India remains at $350 pmt.

The weekly USDA Export Sales report shows net sales of 20,100 metric tons, which is 74% from the previous week and 41% from the prior 4-week average. Increases primarily for Mexico (9,900 MT), Saudi Arabia (5,600 MT), Japan (2,100 MT), Canada (1,700 MT), and El Salvador. Exports of 52,700 MT were down 49% from the previous week and 3% from the prior 4-week average. The destinations were primarily to Haiti (15,200 MT), Japan (12,200 MT), Guatemala (10,000 MT), El Salvador (8,900 MT), and Canada (2,500 MT).

In the futures market, Average Daily Volume was down 18% to 1,126, and Open Interest was down 5.65% to 9,202.

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