Over the past few weeks, the cash market in the delta has remained steady in some regions, and fairly slow in others. Louisiana has had the most action, with prices holding firm at $21 bbl FOB farm most recently. To the best of our knowledge, there is no more rice in farmers’ bins in South Louisiana as old-crop supplies have sold and farmers are gearing up for new crop planting—a good sign for the coming year. In Texas and Missouri, trading has been thin on account that rice in first hands is hard to quantify, but buyers know it’s there. Old crop will likely not be entirely liquidated when the new crop year gets underway. Texas had only one public sale this week with reports of $6.75-$6.80 premiums per cwt over loan. Private sales were much more active, however, with reports of up to 1 million cwt of conventional varieties being purchased—largely on tiered pricing based on milling yields. Estimates predict less than one million cwt remain in first hands in the state and that is likely a stretch. With thin paddy supplies in Texas and South Louisiana, foreign buyers will now depend on New Orleans as usual until new harvest in late July
A tender from the Iraqi Grain Board has everyone on pins and needles, as there were offers from every origin in what was only a Global Tender—nothing that was US specific. The industry desperately needs to win this business to help draw down stocks leading into planting. Given the 18-month gap from Iraq’s last tender, there’s still hope that a US specific tender could be in the works. The US bid was $690 PMT CIF Free Out which matches the offer sourced from Brazil where stocks are incredibly tight. Pakistan fronted the lowest quote at only $553 PMT CIF Free Out, which means it’ll be an uphill battle for the US to win the business. Reports out of Mercosur are commenting that a vessel or two from among Brazil and Uruguay is likely due to the respected quality. As the blind man said, “we will see”!
FAO Rice Price Update:
FAO rice price index shows a 10.6% gain this January compared to the same time last year, driven largely by increased Indica prices. The glutinous and aromatic prices have actually declined, down 30% and 8% respectively on the year, sending signals that the pandemic has resulted in more food purchases based on food security and animal feed than income-driven preference products like aromatic rice.
The general direction is firm to up on account of tight supply, though this will be changing in the coming weeks with the Vietnamese main harvest around the corner. An emerging trend, or explanation for that matter, of India’s surge in exports is the use of their rice as feed stocks.
While this has been a known strategy utilized by China, it is becoming more widely used by other countries as well—specifically Vietnam. Prices have continued to rise over the last three months, with an average increase among the benchmark varieties up approximately 10.9%.
Year over Year increases indicate an average price increase of 20%. Although the US Dollar is down 8% against the Thai Baht since last March, US rice exporters are still struggling to compete against Thailand and the other Asian origins in the Middle Eastern markets. However, the grim situation in South America continues to support strong or steady pricing in the USA.
The nearby contract closed down just over 7 cents from last week but still looks strong which may be the result of the market attempting to buy rice acres in 2021. As corn and bean prices continue to be high, growers able to rotate into those crops will probably be inclined to do so, especially if long-grain demand remains depressed.