The lower delta has initiated harvest, albeit very slowly. Despite many growers becoming eager to harvest, high moisture is still being discovered which is keeping them from doing so. According to the USDA, rice headed in Arkansas is 12% behind the 5-year average, while the other states are mostly in line with their historical averages. Furthermore, sources on the ground continue to be quite positive in regards to their yield expectations for the 2020 crop. As to be expected with the tight supplies through the overall summer doldrums, the cash market has been relatively quiet. There are some reports that early, good quality rice will command a premium, especially in Texas and Louisiana where harvest is imminent, but other than that, the market is stagnant. However several inquiries are being made with regards to gulf coast rough rice by mills in Arkansas needing paddy by truck.  

For the past 3 weeks, export sales have been lower than the preceding week; this week’s export sales were down another 14%, as were loadings. Of course, this is to be expected since the entire old crop is practically spoken for.  As rice is shipped against outstanding sales moving into harvest, new sales will likely continue to move lower. This can only change when the new crop arrives and is dried and ready to sell. The obstacle to seeing net sales increase following harvest relates to heavy global competition from both South America and in Asia. Fortunately for U.S. exports, the U.S. Dollar has softened against other major global currencies which is perhaps best seen in the U.S. Dollar Index on ICE futures where the Dollar is down more than 7% since March. 

Last week, the USDA also released its July World Agriculture & Supply Demand report which contained some bullish changes to old crop and some bearish changes to new crop. For old crop, total use was increased by 2 million cwts, ultimately shaving another 2 million cwts from the carry out stocks. Despite the change, the USDA lowered the 2019 season average farm price to $12 per cwt. In terms of new crop, acre projections were up in the June acre report which added more supply to the balance sheet. While the USDA also increased the usage forecast, it was not sufficient to offset the increased production, leaving the agency to increase stocks by 2.3 million cwts, up to 25 million cwts.   

In Asia, Thai 100% B export prices slid for the fifth consecutive week and were quoted at $465 FOB. Other Asian origins were mixed but all are down from last month. There is rising concern among Asian exporters that global demand may remain depressed in the near future as they struggle to secure export contracts amid softening prices.  

After a several week period of aggressive volatility, the futures market drama seems to be winding down, and unfortunately, that includes trending down. This week the September contract ended lower again as the market continues to wait for new crop. Open interest also declined by 1.7% but the average trading volume was up considerably from last week.

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