| Planting is in full swing across all rice-producing states, with tractors finally firing up on the west coast in California. The most recent crop progress report shows Louisiana 83% planted and 73% emerged. Texas is in second place with 55% planted and 41% emerged, followed then by Arkansas at 33% planted and 5% emerged, Missouri at 30% planted with nothing emerged and Mississippi at 25% planted and 2% emerged. Optimism is high with a return to a fuller planting season across the board and no catastrophic weather events to severely hamper progress. Prices on the ground haven’t changed significantly in recent weeks, as cash trading has been fairly thin. There was a bump in the futures market from the surprise cut in carryout stocks last week, but prices in Texas remain at $17/cwt, Louisiana at $18.50/cwt, and Mississippi, Arkansas, and Missouri at $17/$18. Cash offers have been slow to surface in California, as the enlarged crop now expected to crest 450,000 acres has cast uncertainty over the price for the new crop. This will likely be ferreted out in the coming weeks though as planting gets further underway. In Asia, prices and demand have held steady as a region. Prices in Thailand have held around $485 pmt, while Viet 5% has been at $480 pmt. Pakistan rice registered a jump this week, bumping closer to $510 pmt, up from $495 pmt last week. India has held steady at $440 pmt as they continue to export at an absolutely breakneck pace, now expected to reach a staggering 22 MMT, which is 17% of their total production—a third straight record crop. We’ll use India’s third record crop as a segue way to throw a little shade on a “bombshell” headline that just surfaced entitled “Global rice shortage set to be biggest in 20 years.” We want to caution everyone to take a breath and understand that this is no revelation at all, but the current rice market as we know it. There have been droughts (and floods) in China, the U.S., and South America that have strained production. China has been gobbling up all the broken rice for animal feed, thus requiring India to impose a tariff that increased prices for other major exporters like Vietnam and Thailand. Prices have increased over last year, in part to a constriction in supply, and in large part to India’s tariff. But don’t let an attention-grabbing headline change your expectations for the market in a drastic fashion. The market is fully aware of these dynamics and we don’t expect any radical shifts in the fundamentals will dictate otherwise. A recent GAIN report on Haiti was released this week, which is a welcome update from the post on the current political climate and the ability to continue to source U.S. milled rice. To kick things off, rice imports are expected to stay relatively flat again this year, coming in at 435,000 MT. It is possible, however, for imports to increase on account of a downtrend in local production. Though Haiti has received grants from the IMF to subsidize farmers because of the strains within the country, those funds are yet to be deployed. Therefore, it is optimistic to assume that production can reach the anticipated 65,000 MT this year, up from 60,000 MT last year. Haiti is the most important milled export market for the U.S., where we enjoyed a 97% market share in 2021/22, then down to 90% a year later. This reduction can be attributed directly to gang violence and thus canceled cargoes, but there is concern that the rice from Pakistan reaching Haiti could have long-term implications on the U.S. market share. This market has been and will continue to be a key focus for the U.S. rice industry, and our prices are actually cheaper than domestically produced rice, which bodes well for exports in a politically stable environment. It was yet another dismal week for the USDA Export Sales report, with sales registering at 10,500 MT, a 73% drop from last year and 58% down from the four-week average. Exports of 17,300 MT were down 48% from the previous week and 53% from the four-week average. All involved look forward to better export sales figures when the crop returns to normal size. |
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