Rice Market Update: Challenges Abound to Market New Crop…

Rice Market Update: Challenges Abound to Market New Crop, Cover Production Costs

With harvest now almost complete, the long grain industry finds itself on a precipice and is not entirely sure where to go next. Paddy prices remain firm, but the spot market is not as active as most producers expected it to be post-harvest. That’s because the largest milled market for U.S. rice is getting worse with each passing day, as it’s nearly impossible to unload a vessel in Haiti right now—even for NGOs trying to help the people in crisis.

If we look at paddy exports as a bright spot, the U.S. continues to lose market share in Mexico to other origins from South America, namely Brazil. The 80,000 metric tons of Iraq business that has been keeping mills busy was for old crops, and the milling is winding down.

The domestic market has been the steady savior, but with both Haiti and Iraq in the wings and prices that are significantly higher than the competition, it will be an interesting year marketing this crop.

After considerable delay and debate in Mexico, the federal government published details of their recent Anti-Inflationary Program that has been reported previously in the Rice Advocate. However, it remains unclear as to the treatment for rice and in the meantime, the length decree (link below) is being interpreted as no real change. Any Mexican company with importing history can access the license while the duty exemption is valid only for paddy rice.

The Mexican federal government decree that exempts the payment of import tariff and administrative facilities are granted to various goods of the basic basket and supplies that are indicated. The decree can be found here. A new USDA Gain report on the decree is forthcoming.

These are the factors that don’t even take into account the rising value of the dollar making U.S. exports more expensive, which further depresses our ability to be price competitive with our Western Hemisphere counterparts. Trade is not a focus of the current White House Administration, therefore significant headwinds prevail in developing new markets and sustaining existing ones.

On the ground, Texas prices are holding firm at $17/$18, however with limited activity. The same goes for Louisiana where prices are at $17. Mississippi, Arkansas, and Missouri are all competing for barge space that is limited by low water on the Mississippi River, with prices at $16/$17.

In Asia, the market is holding steady as well. It continues to be an anomaly that rice prices have not experienced the same wild volatility that most other food grains have. Thai 100% B is quoted anywhere from $415-$425 pmt this week, right in line with previous weeks. Vietnamese 5% is pegged at $430 pmt, which is also in line. India remains at $380 pmt, which has been the “new” price since making their tariff announcement.

The weekly USDA export sales report shows net sales of 11,200 mt this week, down 13% to Colombia (10,400 MT), Canada (400 MT, including decreases of 200 MT), Mexico (200 MT), the Netherlands (100 MT), and Micronesia (100 MT). Exports of 7,100 MT were dismal as well, down 87% and headed primarily to Canada (2,400 MT), Mexico (1,900 MT), Jordan (1,000 MT), the United Kingdom (900 MT), and Saudi Arabia (500 MT).

The futures market was active this week, with average daily volume jumping 16% up to 1,448. Open Interest also bumped 4.22% up to 8,289.

Date: 23-Oct-2022
https://www.agfax.com/2022/10/23/rice-market-update-challenges-abound-to-market-new-crop-cover-production-costs/