Effective U.S.-Iraq Memorandum of Understanding Needed

Rolling into the new year, the market is picking up much where it left off. Haiti remains the top destination for milled rice, with the mix of NGO to Private Importers becoming more balanced in January. Recall that the last half of 2021 was almost 100% NGO purchases after the country fell into political disarray. While this business remains steady, another buyer of milled rice needs to emerge—namely Iraq—for the industry to remain healthy. More news is expected on this topic in the coming weeks.

On the ground, prices in LA are just below $14/cwt FOB farm at $13.90, which is little changed from previous reports. In Arkansas, prices are sitting in the $14/cwt range. Texas has shown a small bump as long grain is now looking as high as $8.00/cwt over loan. Mississippi and Missouri are unchanged as well. With this crop securely in the barn and now working through the marketing year, sights are set on planting intentions with the biggest factor this year being fertilizer prices. A report published by Texas A&M University’s Agricultural and Food Policy Center shows that fertilizer costs will be as much as 80% higher for farmers going into the 2022 crop when compared to prices just one year ago in 2021, and rice farmers experience the brunt of these increases. This means that supply is a big question mark going into the year, and February will be a key indicator to ascertain initial projections for the size of the new crop.

The USDA produced their monthly WASDE report this week, and the outlook calls for smaller supplies, lower domestic use, decreased exports, and reduced ending stocks. Smaller supplies for long-grain is reduced from 202.5 million cwt in Dec down to 198.4 million cwt in Jan, a reduction of 2%. Domestic use dropped 2 million cwt, from 115 million cwt to 113 million cwt, or 1.7%. Exports were also reduced by 2 million cwt, and ending stocks by 2.1 million cwt, down to 21.4 million cwt. The projected 2021/22 all rice season-average farm price is raised for long-grain $0.10/cwt up to $13.20. The global outlook is quite similar, with smaller supplies, reduced consumption, lower stocks, with fractionally higher trade. The higher trade can be attributed to India’s fast-paced exports, China’s consumption for feedstock, and Vietnam returning to the export scene in a post-covid world.   

In Asia, Thai prices held steady this week in the $412pmt range, while Viet increased slightly to $400pmt. India remains the low-cost leader at $355pmt, and doesn’t show any signs of moving off that price; three record crops and record exports give them strong momentum. Pakistan, which is also coming off a record crop, is reporting prices competitive with India, but still above at about $365pmt. In the Western Hemisphere, US Long Grain rice is quoted just over $600 pmt, while Uruguay and Argentina are in the $550pmt and $545pmt price range, respectively.

The USDA weekly Export Sales Report show net sales of 21,300 MT for 2021/2022, which was down 23% from last week and 63% from the prior 4-week average. Increases were primarily for Haiti (16,200 MT), Canada (2,300 MT), Mexico (1,100 MT), Belgium (500 MT), and New Zealand (300 MT). Exports of 17,300 MT were down 68% from the previous week and 63% from the prior 4- week average. The destinations were primarily to Haiti (7,200 MT), Mexico (5,500 MT), Canada (2,500 MT), Taiwan (1,100 MT), and Belgium (500 MT).