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With Thanksgiving in the rearview and the heart of the holiday season ahead, we set our sights on a market that continues to be firm despite a few challenges. It was our hope that this report would include good news of significant rains in the northern parts of the Mississippi River and its surrounding watersheds, but unfortunately the low draft continues to be a problem for rice and all commodities. Export growth and sales continue to be stifled by this problem that isn’t “supposed” to happen.
Looking at the quality of the crop, low head rice remains a challenge, where high 40’s and low 50’s are the norm in some regions. In the Delta, the overall averages could be pegged at 53/70, while other regions are having a difficult time recalling when the head rice has been this challenging. There have been a few paddy vessels that have been sent south out of the Louisiana Rail Facility with an average head of 55, which we expect will make our partners in Central America happy. Right now, FOB paddy is quoted at approximately $425 pmt. On the ground, the spot market in Texas indicates an $18/cwt price, Louisiana $17.28-$18/cwt, while Mississippi, Arkansas, and Missouri are all in the $16.75-$17.25/cwt range.
Much of the action in the rice market is taking place in the Eastern Hemisphere, where markets continue to ebb and flow to the tides of the Indian export ban. In past editions, we highlighted the precedent-setting spread between Thai and Viet rice that had reached $100 pmt, with Viet prices higher than Thai. It was expected that converging to a more normal spread of $30-$40 pmt was inevitable. However, instead of Viet prices dropping and Thai prices firming to meet in the middle, Thai prices simply rose over $50 pmt to crest $600 pmt once again, while Viet prices held steady at over $650 pmt. It’s truly a strange phenomenon, but can be explained by the huge purchases from Indonesia in their preparation to avoid shortages should the El Niño prove problematic. Steady purchases from the Philippines, West Africa, and other usual locales don't hurt either. Right now, lifting the Indian export ban appears too far off for any buyers to push any purchases, and this results in firm pricing in Asia and in the U.S.
In all of this news about trade in the East, China is noticeably absent from the market chatter. This is in part because of the soured trade and global relations of present, but a recent USDA GAIN Report on the People’s Republic of China offers some keen insight to the stocks there. While information on rice stocks in the Minimum Support Price program is not publicly available, sources peg the best guess in excess of 40 MMT. Two MMT are 2015 and 2016 crop, 14 MMT are 2018, 16 MMT are 2019, and 12 MMT are 2021 crop. Rice experts at Post are indicating that China is focusing on technology and production with the intent to export in order to increase its “circle of friends” through its Belt and Road initiative. China’s imports have actually decreased by over 2 MMT as a result of the Indian export ban, so there is an argument to make that they will scoop up a significant amount of India’s stock once the export ban is lifted, likely sometime in late Q1 of 2024.
The weekly USDA Export Sales report shows net sales of 74,200 MT this week, down 7% from the previous week and 29% from the prior 4-week average. Exports of 47,400 MT were down 11% from the previous week and 8% from the prior 4-week average.
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