The market in Texas remains firm and steady on supply scarcity. Growers in both Texas and Louisiana are already looking to new crop as the two states begin to prepare for planting season. This year’s spot market prices have proven extremely steady across the board, but especially so for Texas and Louisiana. Historically, prices can vary by $1-2 per cwt between harvest and mid-February, but this year prices have stayed within roughly a $0.50 per cwt range. This is expected to result in steady acres in the lower gulf, while further up the river, rice acres will be forced to contend with corn acres as the corn prices continue to climb. Also grain sorghum and soybeans. Some report that rice acres in Arkansas will be down 20% from 2020.
According to the USDA, the 2020/21 global outlook is for larger supplies, stronger demand and growth in terms of trade. Ultimately all of these factors are expected to result in lower stocks. The 2.2 million tons of additional rice demand is courtesy of rising domestic corn prices in China, where the country intends to utilize more of its old-crop rice as a substitute for corn.
In the US, the long grain balance sheet revisions were dismal as there was nothing new to report on the supply side of the equation and only minimal tuning to the demand side. Domestic use was left unchanged at 125 million cwts, which is up 17% from last year. Export demand was lowered 1 million cwt which bumped ending stocks by the same amount, now projected at 27.3 million cwts. The most positive change was the improved season average farm projection which is now $12.20 per cwt. The story was even less remarkable for US medium and short grain where there were virtually no changes made to the balance sheet. As it pertains to the South, the USDA anticipates slightly better farm prices from a month earlier.
Net sales were down for the third week in a row as demand in Central and South American seems to be pulling back. Conversely, loads were up significantly from the previous week as exporters work to ship against outstanding sales. Overall, total long grain export demand is down just over 18% from last year. According to current numbers the US has marketed 35% of the crop through December versus 47% for the same timeframe the previous year.
Affected by drought much of the growing season, the harvest in the Mercosur region of South America is underway mostly in Paraguay. Heavy rains have fallen in that country during the last two weeks, too late for planted acreage and delaying harvest. The most anticipated is the harvest about to start in the key Brazilian state of Rio Grando do Sul that produces close to 75% of the entire country’s rice. Early field yields will give us an indication as to Brazil’s import needs later in the year particularly as we get into March. Iraq purchased 60,000 tons of Uruguayan rice through the recent tender. Also it is reported that Argentina has sold 30,000 tons of milled rice (15% brokens) to Cuba at an FOB price of $530/ton.
In Asia, India is continuting to benefit from robust export demand which has driven prices up to near 3-year highs at $408 per ton. While Thailand saw a small uptick in pricing, Vietnam held steady as both markets look to the Lunar New Year.
The nearby futures contract closed at $12.89 per cwt, down 13 ½ cents from the previous week. Meanwhile, average volume was 16% and open interest relatively steady.