|The market has remained consistent since Thanksgiving. This is typical for this time of year though, as historically there have not been large chunks of business conducted during the holiday season. This year, however, it is a bit more noticeable because there haven’t been any large chunks of business since the Iraq tenders have completed. The stark lack of offshore sales is crossing into the worrisome category, and even the strong domestic market will likely not be able to continue keeping prices elevated to the same degree moving forward.|
The price of U.S. long grain compared to the competition continues to maintain a spread not seen in recent history. While U.S. long grain 5% has dropped from $740pmt down to $730pmt, it is still nearly $200pmt higher than its Western Hemisphere counterparts. Uruguay at $560pmt, Brazil at $565pmt, and Argentina at $505pmt.
Just after the Thanksgiving break on November 28, a GAIN report on Brazil was published highlighting the competition that the U.S. now faces from this Western Hemisphere juggernaut vying for our core export market in Central America, namely Mexico. First things first, is that Post reduced the forecast for planted rice in Brazil in the coming year to a historical low of 3.9 million acres because crops like soybeans and corn are much more profitable and require less maintenance. This 3.9 million acre is 2.5% lower than last year, and 6% lower than the year before.
|Despite the downturn in U.S. rice exports, the South Louisiana Rail Facility continues to market rice in nearby markets. Their newest development is a barge terminal located at the Port of Lake Charles (pictured) with loading activity underway this week. In just 10 short years, rail, barge, vessel, and now the Agreeta Rice Mill Partnership that will kick off next month has given some 200 rice farmers in SW Louisiana and SE Texas access to markets not previously available.|
|As a threat to the U.S. rice industry, the Brazilian rice grower industry organization FEDERARROZ is combatting higher input costs by advocating for a more ambitious commercial agreement with the Mexican government. Right now, Brazil has a quota of seventy-five thousand tons per year of rice that can be exported tariff-free. They are pushing to grow this agreement, further putting pressure on the U.S. long-grain industry.|
In light of this, Post has increased the export forecast for Brazil from 700,000 MT up to 900,000 MT, an ominous foreboding for the U.S. Exports to Mexico from Brazil have exceeded 305,000 metric tons as of September this year, exponentially higher than in previous years. The reason is two-fold; the first is the high prices from the U.S., and the second is the tax exemption that Mexico placed on imported rice to discourage food inflation. Mexico now accounts for 60% of Brazil’s paddy exports, a statistic that was unfathomable only a few years ago. For example, in 2021, the U.S. exported 765,000 MT to Mexico, then in 2022 it was 625,000, and down to 373,000 through September of this year; barely more than Brazil. Mexico is still procuring the same amount of rice, the U.S. is just getting much less of the business.
In Asia, things look very similar to pre-Thanksgiving numbers. Thai prices are at $430pmt, Viet prices at $435pmt, and Indian prices are now closer to $395pmt with their tariff. Prices remain firm that this level in the middle and far east, and there is little expectation for significant price shifts outside of some unforeseen weather or geopolitical event.
The weekly USDA Export Sales report net sales of 25,300 MT this week primarily for Japan (13,000 MT), Haiti (7,100 MT), Honduras (3,900 MT), Belgium (300 MT), and Canada (200 MT). Exports of 23,500 MT were primarily to Colombia (11,400 MT), Haiti (7,100 MT), Canada (1,900 MT), Mexico (1,700 MT), and Saudi Arabia (500 MT).