Market Update: No Need to Panic?

September 1, 2023
Market Update: No Need to Panic?
The U.S. rice market has remained fairly insulated from the shocks taking place around the globe. As a result, significant market updates have been few and far between in recent weeks as it pertains directly to rice prices. That has largely been because of steady domestic business along with Haiti which has been procuring milled rice at a steady rate. However, just this week the U.S. State Department advised all Americans to leave Haiti immediately by whatever means necessary because of increased gang activity. We hope this doesn’t devolve into the situation we saw directly after the assassination of President Jovenel Moise in July of 2021, but recent reports predict that gangs control nearly 80% of Port-au-Prince. The slowing of shipments to Haiti just as new crops become available is not ideal timing.
Harvest continues to move forward in Louisiana and Texas, with 81% and 70% now reported complete. Both states jumped 10% from last week, indicating they will be largely wrapped up by mid-September. Arkansas, however, still has 90% to go and is just opening up the throttle on harvest. This is about 5% faster than last year, but by mid-September the largest rice state will be moving full-throttle through harvest. Mississippi is showing 15% harvested, while Missouri is at only 1%, and California is looking to get its earliest harvesters in the fields the week of September 11. Crop condition is looking better as we get deeper into harvest, with 75% now registering good to excellent, up from 68% last week. While milling yields along the Gulf Coast have been very inconsistent, farmers and mills in Arkansas are cautiously optimistic. The next two weeks will give us a clear picture.
India remains a confusing mess, which is translating into increased prices and panic for importers and exporters alike. As of this week, the white rice ban remains intact, a 20% tariff on parboiled rice has been imposed, and a minimum export price for Basmati of $1,200 pmt has been imposed, all while the broken rice export ban that has been in place since September 2022 may be relaxing a bit as the trade is talking about sales of brokens to some West African countries. All in all, confusion reigns in the Near and Far East, while the market is “fair to middling” here in North America. It is now anticipated that these export restrictions from India will remain intact into the 1st quarter of 2024, or at least until the election cycle is complete.
A recent GAIN report on Costa Rica rice, shows that U.S. rough rice exports have plummeted following the Costa Rican government’s tariff rate reduction on imported rice from August 2022. Exports of U.S. rice to Costa Rica have fallen a staggering 98% YTD through June of 2023. The attrition the U.S. industry has lost to South America has been widely reported here, where Brazil, Uruguay, and Argentina have been the beneficiaries. This loss was only exacerbated by the tariff rate reduction policy, with the true numbers just now being realized. The reduction of rice acreage over the last decade in Costa Rica would indicate a prime market for U.S. rice. Unfortunately, recent events make the opposite true. The reduction of acres in Costa Rica is highlighted by the fact that in 2013 they produced 163,000 acres of rice; projections for this year are as low as 37,000 acres. This reduction obviously increases their reliance on imports, of which the U.S. needs to claw back its market share.
South American exporting countries (Mercosur) are 90+% sold. The low production numbers in Brazil created a selling domino effect and today FOB prices for paddy are higher than the U.S. at $460-$470 per ton FOB. Paraguay and Argentina began planting new crops of rice two weeks ago. Along with their exporting neighbors, water remains an obstacle in some areas and is the only thing in way to prevent a large acreage increase. Texas knows that feeling! Demand is strong throughout the Western Hemisphere.
Great news on the Export Sales report, with net sales of 82,300 MT, up a whopping 162%, largely to Mexico (57,300 MT) and Haiti (21,000 MT). Exports of 64,600 MT, up huge from last week were primarily to Mexico (48,100 MT), Haiti (7,100 MT), and Venezuela (5,900 MT).
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