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In This Issue:
- Market Update - Rice Market Continues a Complicated Path
- Washington, D.C. Update
- Texas Rice Council Hosts Guatemalan Millers
- Ray Stoesser Memorial Scholarship: Application Available
- Photos from Rice Country
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Market Update - Rice Market Continues a Complicated Path | |
Harvest is complete, and that’s the good news. With all eyes turned now to marketing the crop, there are several challenges that must be overcome in the local and global market. For starters, yields were off by about 5% in most states this year. That’s not the end of the world, but always hits farmers in the pocketbook when this is the case. Worse for the mills though, is that the milling yields are also off compared to historical figures. Mills are citing that it would be an improvement to have an average head rice of 55 this year, and that seems to ring true in all southern states. Lighter yields and poor quality lead to a reduced supply, which often results in higher prices. This is likely not the case this year because prices are already so high; be that cash prices to farmers, paddy shipments to Mexico, or milled rice domestically.
Looking at paddy shipments to Mexico might provide the starkest example of where the long grain industry finds itself. The U.S. industry used to enjoy almost 100% rough rice market share in Mexico, but that has deteriorated significantly in recent years due to multiple factors. Mexico now finds itself oversupplied with rice from South America, namely Brazil. Most warehouses are filled, and there are initial reports that consumption may be decreasing in the region. Remember that Mexico also passed an “anti-inflation” bill that resulted in zero duties on rice imports from South America and other origins. This was supposed to end on December 31, 2022, but has already been extended through the first quarter of 2023, with speculation it will get extended beyond that. To boil it down, U.S. rice is more than 20% more expensive than Brazil and the other Mercosur origins, and any freight advantage is currently a non-factor. Mexico warehouses are full, domestic consumption may be down, the zero import duty has been extended, and the value of the dollar continues to increase, making exports more difficult. We don’t bring these points up to paint a dramatic picture, but to bring to light the reality of the situation this market is facing as we sell this year’s crop. We realize stocks in Mercosur are getting low as planting season there is in full swing. Markets can change quickly and it was only a couple of years ago that Brazil purchased several paddy vessels from the U.S. Many believe that 2023 will be a pivotal year as we will begin a formal process for the next farm bill that will take vital importance.
Currently, the export sales report shows that exports are off by approximately 50% from this time last year. While this trend may not continue for the duration of the year and is likely overstated, it does paint a picture that our exports are seriously lagging behind historical norms. It is difficult to see any of this changing before the new year, and at that point, we will need a big buyer like Iraq to come to market, or a miracle in Haiti so that we can actually unload the rice we have ready to deliver there. The domestic market remains strong and is the sole bright point at the moment. All this to say, if you’re a producer holding rice and have the offer to sell, it might be a good time to consider liquidating and not waiting for higher prices in the future. They certainly could materialize, but there are several factors that could inhibit that from happening in the near term.
In Asia, prices seemed to have softened a little bit. Thai 5% is quoted at $410pmt, down from $415pmt last week. Viet also dropped $5pmt, down to $425pmt. India continues to be the lowest, right in line with last week in the $380-$385pmt range.
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USDA Launches Loan Assistance Tool
This week the Department of Agriculture (USDA) Farm Service Agency launched a new tool to assist agricultural producers in navigating the farm loan application process. The USDA tool is available in 2023 and would streamline the application from 29 pages to 13 pages and improve online functionality for applicants. The tool can be found here.
USDA Announces East Africa Trade Mission
This week, the USDA announced Deputy Secretary Dr. Jewel Bronaugh will lead an agribusiness trade mission to Kenya and Tanzania from October 31-November 4. Representatives across the agricultural sector, including the rice industry, will travel to East Africa in hopes of strengthening ties and building partnerships in support of American agricultural products. This announcement follows last month’s launch of the U.S.-Kenya Strategic Trade and Investment Partnership.
USTR Rejects Section 301 Investigation Petition
This week, the Office of the U.S. Trade Representative (USTR) announced it rejected a petition to conduct a Section 301 investigation into claims of unfair Mexican imports impacting U.S. produce. The petition argued Mexican trade practices pose a threat to Florida’s agricultural sector. In response to the initial petition, Senators Chuck Grassley (R-IA), Joni Ernst (R-IA), Roger Marshall (R-KS), and Patty Murray (D-WA) sent a letter to USTR Ambassador Katherine Tai urging against the petition. They noted the importance of the Mexican market for many American products, including rice, and cautioned that failure to reject the petition could cause Mexico to retaliate and would increase food prices for American consumers. The letter can be found here.
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Texas Rice Council Hosts Guatemalan Millers | |
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On October 24th, 25th, and 26th, the Texas Rice Council in partnership with the US Rice Producers Association (USRPA) hosted a large contingent of leaders in the Guatemalan rice industry. Owners and executive staff from 12 mills, as well as the Director of the national rice organization, ARROZGUA, made up the group. Nineteen men and women participated in the reverse trade mission.
The group visited farmers across the rice growing area from Inez to China, TX. They enjoyed meeting farmers, inspecting the crop, and riding on a combine. Tours of on-farm and commercial drying and storage facilities showed how rice is dried to storable moisture and gave them insight into how the rice is identity-preserved and traceability is ensured. Visits to marketing offices showed another step in verifying the characteristics of the rice, its location, and the services marketing offices provide, such as price discovery, lien and title searches, and payouts, as they assist in making the sale of rice more efficient and effective. The trip culminated with a tour of the Hansen-Mueller facility at the Port of Houston. Once again, the group asked questions about traceability and received explanations of the efforts Hansen-Mueller takes to preserve the quality and integrity of the shipment.
In 2016, a group of Texas producers visited Guatemala to observe programs their rice check-off dollars helped fund to increase rice consumption and U.S. sales into the country. In 2019, when the Port of Houston opened the opportunity to ship rough rice, rice with the hull on it, talks began on selling Texas rice to Guatemala. Covid-19 put those efforts on pause. At the Rice Market and Technology Conference in Cancun, this year efforts resumed.
During their time in Texas, old friendships were strengthened, new friendships were made, and the common bond of helping to feed the world produced in-depth discussions of moving rice from Texas to Guatemala. Concerns millers had come to light as they experienced firsthand how the rice crop is cared for in Texas and they left with the knowledge that Texas is a source of high-quality identity-preserved rice.
Also on the trip, Curtis McCoy, Rice Marketing Specialist for the USDA Foreign Agriculture Service (FAS), participated in the reverse trade mission. Texas rice producers’ promotion check-off dollars are pooled with promotion dollars from other states through the US Rice Producers Association, which is an independent cooperator with FAS, to promote the sale of U.S. rice, in all forms, around the world. Curtis enjoyed field visits with the farmers. He found very insightful the efforts made to protect the quality of the rice as it is dried and stored as well as the efforts to ensure traceability from the field to the vessel. Curtis felt the closeness of the relationships that have been developed over time between Texas farmers, USRPA staff, and leaders of the Guatemalan rice industry.
In closing, Texas rice farmers are appreciative of the expertise and relationships the staff of the US Rice Producers Association has with buyers of rice throughout the world. All business starts with good relationships. This reverse trade mission once again shows the money Texas rice farmers contribute toward promotion, education, and market development is being used effectively and efficiently.
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Some of the millers that visited Raymond Rabius’ Farm. | |
Darryl Socha, General Manager of Rice Farmers Co-op, explains how they track the rice through the drying and storage process. | |
Tony Sanchez, Vice President of Operations at Rice Belt Warehouse walks the millers through how they preserve the identity of every lot of rice and ensure traceability. | |
Diego Pivaral inspects grains of rice for clarity and imperfections. | |
Galen Franz visits with millers at his Inez farm location. | |
Jake Pennington, General Manager at American Rice Growers, in Raywood, separates brokens from whole grain while determining the grade on a sample of Presidio. The variety the millers preferred. | |
Josey Dishman, Chairman of the Texas Rice Producer Board, visits with Marcela Garcia, President and CEO of USRPA, and millers. | |
Cris Brown, Export Merchandiser for Hansen-Mueller, discusses the services they provide to facilitate exporting rice to Guatemala. | |
ARROZGUA presents USRPA CEO, Marcela Garcia, with a plaque celebrating 25 years of partnership. | |
Second Annual Ray Stoesser Memorial Scholarship | |
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This scholarship could be yours! Don’t miss out on this great opportunity!
Applications are due Thursday, December 1.
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Food and Ag Regulatory and Policy Roundup | | |
World Agricultural Production | | |
Grain: World Markets and Trade | | |
USDA Opens Registration for the 2023 Agricultural Outlook Forum
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FAO Rice Price Update - October 2022
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January 18, 2023
Western Rice Belt Conference
El Campo Civic Center, El Campo, Texas
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January 31 - February 1, 2023
26th Annual National Conservation Systems Cotton & Rice Conference
Baton Rouge, Louisiana
More Information
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USRPA does not discriminate in its programs on the basis of race, color, national origin, gender identity, sexual orientation, religion, age, disability, political beliefs, or marital/family status. Persons who require alternative means for communication of information (such as Braille, large print, sign language interpreter or translation) should contact USRPA at 713-974-7423. |
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