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Rice Milling Seminar:

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Hilton Cancun

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Planting occupies the minds of farmers, as the Arkansas contingent is weighing the pros and cons of medium grain vs. long grain, or even rice vs. corn or soybeans, all against the backdrop of the upcoming Farm Bill, input costs, and landlord wishes. With old crop mostly gone, milled business is steady, but not astounding. No fresh business from Iraq has left the industry on dependable domestic millings, but the U.S. is not the only origin lacking Iraqi business— South America can say the same thing. This makes sense, given their drought situation along with the cheap prices out of Asia, but the lack of Iraqi demand is opening up exportable supplies in South America and making them available to find their way into Central America, threatening this core U.S. market. Volume buying of Mercosur rice, both milled and paddy for Mexico has continued this week as that area of South America approaches the end of the current harvest.

U.S. rice prices are already high when compared with international competition, (further compounded by the value of the dollar), which is a saving grace when looking at the input costs. However, with U.S. 5% long grain registering at $650pmt and Brazil 5% at $560pmt, it is clear why Central American buyers are looking for more economic alternatives.

Prices in the Eastern Hemisphere are significantly cheaper, providing evidence of why Iraq is sourcing product from that region. In Thailand, prices were relatively constant between $415-$420pmt, with Vietnam in much the same price range. Most notably but to no surprise is India’s steady price of $355pmt. Their illegal subsidies, resulting in three years of record production, have singled out rice as the one grain that hasn’t seen price increases on account of inflation. Even the increase in China’s purchase of brokens has increased the value of brokens to get close to the value of a 5%–a phenomenon never before seen. However, it clearly shows the changing landscape and the importance of animal feed.

The Crop Progress Report published on April 18th shows that as an industry, we are 14% behind average planting progress. This is largely attributed to Arkansas, which carries the lion’s share, as the report shows only 9% planted against 34% for the five-year average. Louisiana is right on schedule, registering 73% complete, right in line with Texas. Mississippi is at 17% behind last year, and Missouri is at 1%, 20% behind last year. Emergence has occurred on more than half the Louisiana crop, just under half of the Texas crop, and below 5% in Arkansas, Mississippi, and Missouri.

On the ground, prices in Texas are registering at $17/cwt, with Louisiana just below that at $16.67/cwt. Mississippi, Arkansas, and Missouri are all just a step behind at $15.50/$16.25. In the futures market, average daily volume bumped 34% up to 2,064, and open interest moved 2% in the positive to 10,453.

The weekly USDA Export Sales report shows net sales of 64,700 MT for 2021/2022, up 29% from the previous week and 63% from the prior 4-week average. Increases were primarily for Mexico (40,100 MT), Haiti (15,200 MT, including decreases of 100 MT), Canada (3,300 MT), Saudi Arabia (1,900 MT), and Jordan (1,800 MT). Exports of 38,100 MT were down 19% from the previous week and 27% from the prior 4- week average. The destinations were primarily to Japan (12,100 MT), Honduras (9,100 MT), Haiti (7,100 MT), Canada (3,700 MT), and Mexico (2,100 MT). 

This week, USRPA signed on to a letter urging for a solution to current freight rail service problems. It recommended financial incentives for efficiency improvements in freight rail and quicker processing of emergency service orders allowing alternative carriers to use incumbent carrier’s tracks. The letter also advocated for improved data reporting and requiring annual rail service assurance reports to increase accountability. The letter, led by the Agricultural Transportation Working Group, as addressed to the Surface Transportation Board and sent to the President, Secretary of Agriculture and members of the House and Senate Agriculture and Transportation Committees. The letter in its entirety can be read here.

USRPA also signed on to a letter to Senate Finance and House Ways and Means leadership calling on them to reject the FY 2023 tax revenue proposals released by Treasury. The letter expressed concern that the proposals would negatively impact American farmers and ranchers and asked for current tax provisions to remain in place. The letter in its entirety can be read here.

USRPA signed on to a letter to the Army Corps Commander of the New Orleans District expressing concerns about a permit to expand the CEMUS Deep Water Port in Port Allen, Louisiana. The letter urged the Army Corps to consider potential safety, economic, and competitive impacts when assessing the application to accommodate post-Panamax ships in the port. This letter was also sent to the Secretary of Agriculture and the Army Corps Commanding General for Civil and Emergency Operations. The letter in its entirety can be read here.

Last week, President Biden traveled to Iowa to announce he would temporarily lift the summer ban on E15 fuel sales. Typically, higher ethanol gasoline cannot be sold in most of the country between June 1 and September 15. As fuel costs remain high across the country, the EPA will issue an emergency waiver in hopes of reducing fuel costs.