The rice industry has continued to shuffle along since the last report with very little new information to digest. The trade is waiting for the July WASDE report that will be issued on July 10 as the next (and last) big slug of market influencing factors prior to the advent of new crop harvest.
In government reports this week, export sales were reported marginally lower than the previous week’s values but remained in positive territory. Old crop has almost certainly hit the “pipeline minimum” which is to say that there is virtually no old crop uncommitted at this time which accounts for a large amount of the lagging export figures. The next 3-4 weeks should see this figure increase as new crop becomes available for shipment. If this comes to pass then we can expect to see stronger exports for the next few months. If it does not, then the dynamics change entirely and the U.S. is at a disadvantage to its export competitors. Time will tell.
Similarly, the vessel loadings for the week were off for largely the same reasons. Asian benchmark pricing has continued to slide on exchange rate factors as well as the easing of the supply/demand forces that has allowed the market to retract to lower levels. Any shock to either side of the equation in that sphere will most likely have major consequences and for that reason it is the author’s opinion that major potential volatility still exists in those markets. USDA has held its world market price estimate constant for the week, marking the third week in a row of no change. The market is at a tipping point pending the influx of fresh supply so this stasis is unlikely to persist into the coming weeks.
Domestically, the first fields in Texas and Louisiana have been drained and harvest will commence over the next few days. These first small lots will provide some insight into the quality and yields that can be expected along the Gulf Coast. The Upper Delta is still struggling with weather considerations, although the near-term forecasts suggest that these events may dissipate, providing an opportunity for growers in those areas to make up some time. The adverse weather conditions have undoubtedly impacted quality and yields although the extent of those impacts have yet to be determined.
From a pricing standpoint, very little has changed from the previous report. The futures market has been active for the week, with the only occurrence of note is the July contract giving way to the September ’20 contract as the new nearby benchmark. This week’s WASDE report, as mentioned earlier, will be a market mover in several regards. The first will be the changing fundamentals in the rice market while the second will be the price impacts that result from changes in the other commodities’ balance sheets. Expected changes to the rice estimate will be increased acreage as the June 30 acreage report is factored in, as well as a potential downward yield adjustment due to the environmental factors in Arkansas, Missouri, and Mississippi. The export figure may also be revised, and the probabilities suggest a decrease at this point.
History and speculation point to a bearish report but surprises are not uncommon in the July installment. Only time will tell.