The Iraq business has been dominating the news recently as there have been multiple rumors and confirmed purchases over the past six weeks.  Below is a review of what’s been tallied up at this point, as there has been a substantial amount of rice purchased from the U.S., Uruguay, and most recently Thailand.  See table below:

OriginQty (metric tons)Price (appx)Notes
United States80,000$540 CIF NOLABulk, Arkansas
United States40,000$540 CIF NOLABagged, Pending LOC, LA & TX
Thailand40,000TBDFive years since the last sale
Uruguay60,000$560 FOBLoading complete
Total220,000  

The USDA published the WASDE report this week, and the focus is on lower supplies on account of a shorter crop, lower domestic use, and higher exports—thank you Iraq.  Beginning stocks are a bit lower based on higher exports and fewer imports in 2020/21.  Production is down by over 2 million cwt, and yields are pegged at 7,544 pounds per acre, down from 7,600 in the previous forecast. Because of the container shortage and high freight rates plaguing the global supply chain, rice imports were lowered by 1 million cwt, down to 38 million cwt. The Iraq business bumped the long-grain exports by 2 million cwt, up to 65 million cwt, but the drought in CA partially offset the expected medium-grain exports, lowered by 1 million cwt down to 26 million cwt.  On a global outlook, the expectation is for increased supplies, slightly higher consumption, broader trade, and increased ending stocks.  India’s consecutive bumper harvests and the record-low pricing from major exporters like Vietnam and Thailand are contributing to higher trade and higher stocks.

The weekly Exports/Sales report offered an increase of nearly 700% for sales on account of the Iraqi business, though only 4,600 mt of exports this week, a decrease of 89%. This is no surprise.

In Asia, the market remains sideways to down, with Thai, Viet, and Indian pricing all softening a bit more this week.  Covid and container shortages are limiting India’s ability to load and ship rice, hence the price holding steady there.  It’s a similar story in Vietnam, where Covid shutdowns are making it difficult to load containers—when they’re even available.  All prices for Thai, Viet and Indian rice are converging in the $380-385 MT range this week. 

On the ground, harvest in Texas is approaching the halfway point, while Louisiana is now at least 35% harvested.  Optimism for yields persists in Arkansas where harvest hasn’t begun yet, and will perhaps make up for the sub-par yields reported thus far in LA and TX.  While new crop is exciting to discuss, the “hangover” of old-crop supplies weighs heavy on the market—especially when Covid-19 has kept domestic buying at a minimum on account of school lunch programs being restricted.  Like AK, Mississippi won’t begin harvest until the end of August, but the expectations are a bit more average when compared to the optimistic tone coming out of AK. 

Futures action remained relatively muted, with open interest only .4% down at 7,679.  Average daily volume was at 492, 32% below last week.  Futures would indicate optimism that the required Letter of Credit will actualize the balance of the  40,000 mt of Iraqi business yet to be confirmed, but holding cautious before breaking out with the absolute confirmation.

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