| The weather certainly keeps things interesting. Where we were praying for rain only weeks ago to get the Mississippi levels up, now there is so much in some places it’s slowing down deliveries again. And the arctic blast that froze much of Arkansas in recent weeks put a damper on domestic movement, slowing action a bit further. Nothing earth shattering that would change the market in a drastic way, but enough to notice a slowdown in both cash purchases, barge loadings, and exports. After a banner week of export sales last week, sales dropped nearly 75% this week and exports dropped about 20%. On the ground, we are reporting prices in Texas at $18.75/cwt, Louisiana at $18.36/cwt, and Mississippi, Arkansas, and Missouri at $17-$17.25/cwt. Spring planting is just around the corner and farmers are making variety and acreage decisions along the gulf coast. The obvious goal for exporters is to maximize bookings in both milled and paddy sales over these next few weeks before the South American harvest gets in full swing. The expectations for the South American crop are on the low side of average, but will be the first Western Hemisphere competition in several months. Prices remain firm for U.S. prices at the moment; milled quotes are as high as $750 pmt into Central and South America while paddy prices hover around $440/ton FOB New Orleans. Now it’s just a matter of being able to get it there with the rippling logistical issues from the drought-ridden Panama Canal and the terrorist activity in the MENA region. The Houthi terrorist situation is placing extreme distress on the global complex for rice and all trade. Recall the snarl in the Suez Canal when the now infamous “Ever Given” blocked the trade route for six days in 2021. In this current crisis, virtually all shipping carriers have ceased activity in that region for the time being. These shipping disruptions aren’t limited to the Red Sea and Suez Canal, as global trade lanes are feeling the burden of losing a major trade channel. This has driven up global shipping costs, particularly for containers, along with substantial and unpredictable surcharges causing exporters to pull out of the market. The historic drought in Panama only compounds the problem where surcharges are also being imposed. These obstacles have driven most carriers to file emergency surcharges, which in the MENA region can range from $400 to $2,500 per container ($20 to $125 per ton in 1 MT totes). The bottom line is that the Federal Maritime Commission (FMC) is allowing carriers to change rates at any time and without any notice, basically eliminating the value of any freight quote. Until the FMC revokes or rescinds that policy, export sales to MENA will be extremely risky. In Asia, prices jumped from their already high levels. Thai prices bumped as high as $667 pmt, and Vietnam as high as $650. Strong demand from Indonesia for Thailand, and the Philippines for Vietnam is sustaining the upward pressure. |
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