Volume 17, Issue 35
September 3, 2020
In This Issue:
  • Weather, Aftermath of Hurricane Laura Continue to Dominate U.S. Harvest News
  • Stumbling Blocks for USMCA Implementation
  • US Rice Master Class in Mexico Attracts New Followers
Weather, Aftermath of Hurricane Laura Continue to Dominate U.S. Harvest News
Not surprisingly, the big story this week was the path left by Hurricane Laura as it roared through Louisiana and the Delta. This category 4 Atlantic hurricane was one of the strongest on record and it mainly brought damage on the Louisiana rice industry, however, its impacts were also felt in Arkansas and parts of Mississippi. As a result of the storm, harvest was brought to a standstill in these states as growers, warehouses and mills sought to fortify and preserve what they could. At the same time, the already slow market came to a halt as traders looked to analyze the damage done to both supplies and to infrastructure. For example, the Port of Lake Charles’ capacity to export grain will be limited at best over the next few weeks as the port attempts to quickly repair all the damages. With all of the havoc, bids were scarce and when they surfaced, prices generally sideways and didn’t garner any real interest from sellers. Until electricity and communication services are fully restored the market will continue in a holding pattern. The delta continued to be hampered with showers this week that were not as a result of “Laura”.

As for the harvest metrics, the USDA reported that California, Texas and Louisiana to be 100% headed, and Arkansas to be 95% headed (5% behind the 5-year average). Mississippi and Missouri are tracking their 5-year averages relatively close. The greater concern in Arkansas relates to harvest delays. Already being 9% behind the 5-year average before Hurricane Laura inundated the rice crop, most growers becoming increasingly anxious over the additional delays. As a result of the heavy rains, there have been numerous reports of rice falling; down rice will only add to the setback by causing harvesters to move much slower through the fields as they attempt to pick up the rice. In Texas, the throttle is wide opened as growers make speedy progress with harvest; the first crop is expected to be mostly finished by next week and the hopes are high for a good ratoon crop. High paddy prices in Brazil as indicated in the CEPEA chart below, due to a year of low production and complications from the COVID-19 have mills and traders looking to the U.S. for rough rice. Negotiations are on-going and we believe somewhere between 150,000 and 300,000 tons of US paddy will find its way to Brazilian rice mills. Like the U.S., the Mercosur markets have been turned upside down largely by the virus and production issues. 

In Asia, demand for Thai rice remained flat causing exporters to lower their prices in an effort to drum up more business. The current price divergence between Thailand and other exporting origins in Asia suggests that Thai prices may drift a little lower in the weeks ahead. Although Vietnam’s prices were resilient this week despite a slowing demand, the price support seems to be more justified by a waning supply than demand strength. Meanwhile, India and Bangladesh continue to battle severe flooding. A recent article cited one-third of Bangladesh to be under water and it is reported that more than $4.29 billion worth of rice has been destroyed. Considering that Bangladesh rice imports range from 1.49 million metric tons to as low as 100,000 metric tons, the impact that this flooding could have on the global rice market can’t be overlooked.

At first the futures market appeared relatively unresponsive to Hurricane Laura, but over the past few days it seems to be responding more appropriately as open interest improved despite volume falling to levels not seen since July. Volume seems to have rounded a corner and is looking to grow. Meanwhile, the nearby contract moved down $12.45 per cwt after spiking to $12.62 just a few days ago. Once more of the crop damage and harvest delays are better sorted out, the market may seek to push higher.

Center for Advanced Studies on Applied Economics in Brazil.
Farmers in SW Louisiana continue to recuperate from the destruction caused by Hurricane Laura. Damage to on-farm storage, rice still in the field has the current market at a standstill, The effort to clean out the Port of Lake Charles ship channel of storm debris contributes to rough rice prices being in a holding pattern. Lack of cel phone towers, electricity, roadways, rail service and other essential services to the community is getting support and help from numerous states.
Billy Hefner in Colorado County, Southwest of Houston, Texas farms with his son Bill Hefner. Together the finished their first of approximately 1,100 acres, of which 350 were organic, almost two weeks ago. All the Hefner's rice is either contracted or sold. Areas west of Houston were lucky enough to miss Laura all together and is currently looking forward to predicted rain in the near future to support ratoon crop growth.
Stumbling Blocks for USMCA Implementation
Barely a month into implementation, USMCA is already fraught with major stumbling blocks as Canada and Mexico warn recent U.S. trade actions will have serious implications on the deal’s success. Main issues include the re-imposition of tariffs on Canadian aluminum and the new plan to address the complaints of southeastern season growers of fresh produce against Mexican produce imports.

Earlier this month, President Trump announced plans to impose a 10-percent additional tariff on aluminum imports from Canada, citing national security concerns due to a surge of Canadian aluminum in the market. Canada met the decision with an announcement of its own retaliatory tariffs on U.S. aluminum products. As for the multiagency plan addressing the impact of seasonal produce imports from Mexico, USTR will investigate imports of blueberries and seek discussions with Mexico addressing other concerns about imports of Mexican strawberries, bell peppers, and other perishable products.

The aluminum tariffs and seasonality plan are only two examples of issues that are impeding smooth implementation of the North American trade pact. USMCA made sweeping changes to the rules of origin for autos and auto parts as well as sweeping labor standards reform and dispute settlement proceedings. USRPA will be monitoring developments in North American trade relations on behalf of the U.S. rice farmer.
US Rice Master Class in Mexico Attracts New Followers
This week ended the first segment of the Master Class of American long-grain rice produced in Mexico by the US Rice Producers Association. During the first segment, Chef Melissa Morelos, MasterChef Mexico contestant and finalist, presented various recipes from Latin America with American long-grain rice as the main ingredient. The Master Class was broadcast simultaneously on Zoom and via Facebook live on the Consume Arroz USA fan page.

The second segment starts September 7th and features chef Joaquín Quezada, Chief Instructor at the Valle de México University and Director of the International Hospitality, Cuisine, and Tourism Management Center for Studies. Chef Joaquín Quezada, will be preparing his take on traditional Mexican recipes with American long-grain rice as the main ingredient.

Currently, the fan page has a total of 16,369 followers of which 989 are new followers who have joined in the last month.
Upcoming Events
October 21-22, 2020
RMTC Virtual Networking Days
More information coming soon
Trade Update
Legislative Update
Rice Price Update - September 2020

The FAO All Rice Price Index (2014-16=100) averaged 113.2 points in August 2020, up 2.7 percent from July and 8.7 percent above its value a year earlier. August’s increase was driven by Indica and Aroma c prices, which drew support from seasonal tightness and African demand. Tight Thai availability was also behind a mild increase in the Glutinous Index, while the Japonica Index remained essentially unvaried for the fifth straight month. 
Arkansas Rice Update

It includes information on progress, defoliation in reproductive rice, disease update, and rice stink bugs.

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