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The market is steady as all eyes are on Washington, D.C. with the historic pace and implementation of the new administration’s policies, executive orders, and initiatives. The result for prices on the ground has been “more of the same,” as many countries, in our estimation, are awaiting final tariff announcements to see how that may impact deals moving forward. While this won’t delay purchases for long, it certainly provides a reason for pause to some impacted countries—one of which happens to be our #1 export market (Mexico), and the other is our fifth (Canada). It’s a good thing our domestic market is resilient, even in the face of record imports last year, as those domestic sales underpin the pricing stability we’ve experienced in the previous 18 months. The domestic market will be strongly needed for 2025.
To offer a bit of good news, our exports for the first three quarters of 2024 to our top export markets are 17% higher than the entirety of the 2023 calendar year! When census data is finalized for the balance of the 2024 calendar year, we expect to see a marked increase of at least 30% from 2023 to 2024. Top markets continue to be Mexico and Haiti for long grain, with Japan and South Korea for medium grain. The biggest increase is certainly Mexico, which is excellent news given their anti-inflation policies and ready supply coming from other neighbors in the region. It’s great news that exports are looking up; now we just need prices to do the same. But with theweight of India’s supply and illegal subsidies resulting in price wars around the necks of every exporting country, it is certainly an uphill battle. All eyes will be on today’s export sales numbers.
A USDA GAIN Report was published for Brazil shortly before the holidays and provides insight into the competition we are likely facing from an export standpoint in the coming months. Post projects that rice production will rise in 2024/25 due to the expansion of the planted area, led by greater profitability from rice sales and improvements in yield. Post expects the planted area for MY 2024/25 at 3.95 million acres and increased its forecast for milled rice production by 1% for the period to 7.5 million metric tons of milled rice equivalent, or 11 MMT of paddy rice. We feel these numbers are conservative.
This small yet significant increase is based on the projections of higher yields and a bigger planted area for the year. It's important to note that the anticipated growth in rice production for MY 2024/25 relies on the successful recovery of the state of Rio Grande do Sul, as well as incentives for producers to address the challenges caused by last year’s floods. The Brazilian harvest will not be in full swing until early March.
Post increased its forecast for rice exports for MY 2024/25 to 1.2 MMT from the previous 1.1 MMT and maintained its estimate for exports for MY 2023/24 at 1.1 MMT. Rice exports are expected to decline for the 2023/24 harvest due to several factors: domestic prices are higher than export values, domestic availability is lower, and production in the United States has increased. This is great news for the U.S. rice producer, as it would indicate the trade is expecting US long grain to win back some export markets. However, U.S. low milling yields continue to complicate purchases.
The weekly USDA Export Sales report shows net sales of 46,400 MT this week, up noticeably from the previous week and up 17% from the prior 4-week average. Exports of 41,700 MT were down 29% from the previous week and 20% from the prior 4-week average.
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