The cash market was largely unmoved from the previous two weeks.  Price action in the cash market appears to be waiting for further crop updates.  Last week the southern Delta was pummeled with unusual volumes of rain which unfortunately arrived just weeks before initiating harvest in both Texas and Louisiana.  Growers in both states have expressed concern over the impact these late rains will have on their harvest and crop quality.  

The USDA continues to report relatively favorable crop conditions despite the weather events that have so far struck the southern Delta.  Although growers hope to battle through the adverse weather conditions, they are also quick to recognize that there is little room for error this year as supplies are already down considerably. 

Earlier this week, the USDA published the July WASDE report which contained a few semi-bearish revisions.  First, the USDA bumped long-grain carryout by 4 million cwts which bolstered the new crop’s balance sheet.  Despite shaving one million cwts from the domestic use, the USDA was still able to raise total demand for US long-grain by improving their export expectations by 2 million cwts.  Overall, the bottom line changes from last month was raising 2021 ending stocks by 3 million cwts.  However, since the crop has yet to mature and be harvested, these revisions had little impact on the cash or futures market.  The futures market most recently traded at $13.14 per cwts, a relatively uneventful level since rice has been trading in that vicinity for the past several weeks.

In Asia, significant price drops in Viet 5% led the week.  At the end of June, Viet 5% was trading around $470 PMT, and currently, in only two weeks’ time, prices have dropped to $405-$410 PMT.  Thai prices have been below Viet prices consistently this marketing year, and this convergence was anticipated, but not at the velocity in which it happened.  Some are pointing to sky-high freight rates, while it is more likely the fact that additional supplies are hitting the market, and export demand is simply slow at this time.  What is unique about the drop in Viet and Thai prices is that India has remained fairly steady at $385 PMT, seemingly immune to the dropping prices from the other two primary exporters.

The softening prices make for an interesting market with the Philippines looking to buy as much as 2 MMT this year.  Because Viet prices had been so high compared to Thailand, it was expected that Thailand would win the bulk of the business.  But now with India, Viet, and Thai prices all within $25-$35 PMT of each other, the Philippines will be in a good place as a large buyer.  India continues to ship rice at record speeds, but it’s necessary because they need to find a home for two years of consecutive record crops.  Thankfully Africa has been a steady customer, and with the Philippine business in the wings, we could see some upward price pressure in India in the coming months.