|
The strong value of the dollar continues to be a leading factor contributing to the dismal export situation for U.S. long-grain rice. While the increased price of rice makes sense to offset the rise of the input costs required to grow the crop this year, the strength of the dollar is putting additional upward pressure on prices. This further augments the uncompetitive nature of the pricing difference that has befallen U.S. long-grain rice as of late when compared to other origins in the western hemisphere and around the globe. This is not a new phenomenon, and the industry has done a good job finding customers beyond Iraq and Haiti. There is some good news coming from Haiti in that there may be an opportunity to export again as the organization returns.
In Asia, prices seem to have bumped across the board this week; perhaps because BULOG, Indonesia’s rice procurement arm, made purchases of 1 MMT in recent weeks, exhausting any surplus supply that may have been on the market. Viet prices went from $435pmt last week to $445pmt this week, Thai prices from $430pmt to $440pmt, and Indian prices at $400, up from the $380pmt range only weeks ago. We don’t expect BULOG’s purchase to create any type of price run in the short term as it wasn’t an “emergency procurement,” but the large buy certainly shores up pricing in the near term.
Last week we highlighted a GAIN report on Brazil and focused on the direct impact Brazil has had on eroding the share of U.S. business to Mexico. We want to further expand on that as imports account for about 80% of Mexico’s total rice consumption, and about 80% of the imports have historically been paddy. In years past, the United States has enjoyed almost a 100% share of those paddy exports. That business has slowly been fading over the years, but in March 2022 Brazil came in strong, and this year the U.S. accounts for closer to only 20% of Mexico’s imports. This dynamic has less to do with the strong dollar that we mentioned above, and more to do with a systemic quality problem and tariff issues that have caused Mexico to find alternative sources of rice from the U.S. There is even talk of the Mexican government removing tariffs on all rice imports — not just paddy like we have now — which will open up an onslaught of cheaper rice options from Vietnam, Thailand, and even India. All this to say, there is no single factor that will win back the Mexico business overnight.
On the ground, paddy prices have remained relatively steady, and high considering the lack of export business. Texas has been holding firm at $17/$18 per cwt, while Louisiana is at $17 per cwt. Mississippi, Arkansas, and Missouri are all in the $17.00-$17.25 per cwt range.
The weekly USDA Export Sales report shows net sales of 77,700 MT primarily for Jordan (27,400 MT), Panama (27,000 MT), Haiti (15,200 MT), Mexico (5,000 MT), and Canada (2,200 MT). Exports of 8,900 MT were primarily to Mexico (2,900 MT), South Korea (2,600 MT), Canada (2,400 MT), Saudi Arabia (300 MT), and Germany (100 MT).
| 
