| International news rules the day for this issue of the Advocate, as India is now considering banning most rice exports, including non-basmati varieties, because of soaring domestic prices. This is huge news for the global rice complex, as India is the largest exporter in the world at approximately 22 million metric tons, whereas Thailand and Vietnam fluctuate between 7-9 million metric tons in vying for second place. If India truly follows through with this drastic measure as a result of troublesome El Niño weather patterns, it could send reverberations through the market reminiscent of the 2008 food crisis. While global food security is a primary focus of any rice producer, a shock to the supply side of the equation as significant as India banning exports will certainly find its way into the western hemisphere and support U.S. prices in the coming marketing year. In other international news, Mexican importers visited Pakistan to inspect rice mills, ports, farms, and facilities to investigate the possibility of lifting the export ban imposed on Pakistan. This would be a significant change in the market dynamic, and another barb in the already complex relationship that is being navigated to maintain our largest trading partner in Mexico. Pakistan has recently made inroads into Haiti, creating a problem for U.S. exporters, and intrusion from Pakistan into our core Mexican market will be another point of contention moving forward this year. Recent results of the Panama tender and crop damage caused by El Niño in various Andean markets along with Central America and Mexico indicate that many buyers’ eyes are on the U.S. harvest. The first fields are being cut in Texas and Louisiana. As we all know, until it's cut, dried, and stored we don’t know what we have in the way of quality, especially for good milling yields and minimum chalk. Turning now to the WASDE report that was just released, it appears that the USDA has raised world stocks by 3.6 MMT when China is excluded. The reports lowered the 22/23 carryover number by 1 million cwt down to 15.8 million cwt, which is where they estimate the carryover in 2023 to be as well. They also expect a production increase of 2.8 million cwt on revised acre reports filtering in. The average farm price was lowered $0.50/cwt to $14.50/cwt. In Asia, prices are still firming with Thai 100% now as high as $530 pmt, and Viet priced at $550 pmt. India is approaching $500 pmt, but we will see what the weather dictates moving forward and how it may shape the export policy of the globe's largest rice shipper. Daily volume dropped 13% this week down to 470, while open interest stayed flat at 8,484. It was another bad week in the USDA Export Sales Report. Net sales of 4,000 MT for were down 32% from the previous week and 66% from the prior four-week average. Increases were primarily for Mexico (2,000 MT), Canada (1,700 MT), and the Bahamas (200 MT). Exports of 4,800 MT were down 91% from the previous week and 89% from the prior four-week average. The destinations were primarily to Mexico (3,200 MT), Canada (1,100 MT), Japan (100 MT), Saudi Arabia (100 MT), and Bahamas (100 MT). |
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