Market Update: U.S. Rice Harvest Moving North in the Delta

August 18, 2023
The USDA WASDE report was released last Friday, and they remained consistent with another increase in long grain production estimates. This is in line with industry assumptions as well, with the USDA pegging long grain production at 146.8 million cwt. This helped increase ending stocks, but they are still at a bullish level because of the tight supply all year long. What is more exciting is the news of Iraq posting an 80,000 metric ton sale in the Export Sales report from last week. This business, along with steady domestic and Haitian millings, is phenomenal news amidst a large crop. It can be argued that this Iraq booking is a direct result of the confusion in the east resulting from India’s white rice export ban. Iraq responded swiftly and with confidence by booking U.S. rice early, removing themselves from the market froth in Thailand and Vietnam.
Last week we discussed the quickly reducing spread between Asian and U.S. rice, and the chart below highlights the change. You can see the immediate response to the Indian export ban, with prices in Thailand this week registering as high as $655 pmt, and Viet prices as high as $630 pmt. Vietnam is enjoying its discount on Thai prices and is looking to notch a record year in exports on the backs of the confusion.
One of the peculiar oddities of the price increase in response to India’s ban is that there is still plenty of rice around the globe. In fact, the USDA is projecting the global rice production to be slightly higher this year because of larger crops in Russia, Uganda, and the U.S. India’s reasoning for the ban is to control domestic inflation, but externally, this is an election year, and a ban like this can be considered “par for the course” in a manner of speaking. Nonetheless, the market is reacting, and traders are left finding ways to feed hungry bellies in many of the poorest countries that have historically been customers of India.
On the ground here in the states, harvest continues to progress in Louisiana and Texas, with other states excited to get started. The pricing dynamic will be very interesting as old crop and new crop prices converge. The old crop has been so expensive for so long, but new crop futures values are considerably lower simply based on supply. This likely means the cash market will be at a standstill in the coming weeks, and may be quiet all the way through October if the global situation remains opaque on its impact on pricing in the U.S. 
Turning to the Crop Progress report, Arkansas made a huge jump and is now 91% headed and 2% harvested. Louisiana is 96% and 61%, with Texas at 96% and 40%. Missouri and Mississippi are getting closer to harvest, but haven’t started yet, with 78% and 91% headed. California is also making strong progress, now showing 65% headed. Rice condition continues to trend in a positive direction, where 67% of the crop is in good to excellent condition, 27% is fair, and only 6% is in poor/very poor. Initial yields and milling yields are positive, but also volatile. There are early reports of chalk, but still premature to make any significant calls.
The weekly export sales report shows net sales of 24,700 MT, primarily for Mexico (14,600 MT) and Haiti (8,300 MT). Exports of 17,700 MT were primarily to Japan (13,000 MT), Mexico (2,200 MT), and Canada (1,800 MT).
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