The Rice Advocate, Vol. 17, Issue 36

Volume 17, Issue 36

September 10, 2020

In This Issue:

One Word Describes the Rice Market: “Uncertainty”
FECARROZ Names New President
USCOFCO's Vice President Luan Richeng Elected as New CNAGS Chair

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One Word Describes the Rice Market: "Uncertainty"

Things are beginning to liven up in the rice market in the aftermath of the recent hurricanes and the uncertainty that continues to surround the US rice crop production.

In the international market, export sales were notably lower this week than in the prior report. Consistent sales are still difficult given the limited supply available and smaller weekly tonnages can be expected over the next several weeks. Vessel loadings were also decreased for much the same reasons. Asian benchmark pricing has escalated over the week, with all of the origins posting modest gains. Global supply and demand factors seem to be the driving force behind the changes at this time. Currency exchange rates also played a role in the changing values. USDA raised its world market price estimate for the week for both classes as well.

In the domestic market, the damage from recent weather events is still being assessed. It is widely accepted that damage has occurred to the 2020 rice crop in most of the production areas, however the size and scope has yet to be determined. Cash prices have firmed somewhat as a result in most areas. Quality and milling yields are still big question marks to be determined that will drive the pricing equation for the remainder of the year.

The futures market this week has continued to surge, with all open contracts on the board closing higher. Gains ranged from 0.68% - 1.4% for the open contracts, while the largest gains were made in the deferred contract months. Both volume and open interest were lower than the week prior.

In other news, the September supply and demand report will be released in the next few days which should provide some bullish news for rice. Given the production related events that have occurred since the August installment, some yield adjustment can be expected, and the resultant transposition through the balance sheet should impact prices.

Also, reports from South America suggest that the supply situation in that region is getting tighter. Buyers from the Mercosur area have already made overtures to purchase US rough rice at harvest to offset these deficiencies. Any sale of consequence to those destinations would boost the demand side of the balance sheet and help to firm up prices even further.

Note: As previously mentioned in the Rice Advocate with regards to Brazil’s rice shortage, yesterday the Brazilian government made it formal with the announcement of a duty-free access of up to 400,000 tons of rice of any origin. Two U.S. vessels have been confirmed and others are being negotiated. Also rice imports from Guyana and India reported were confirmed. With the Brazilian state of Santa Catarina beginning a harvest in December and a full harvest in Mercosur expected in January and beyond, the needs of the country should normalize by the end of the year.

Wildfires in the Western United States are forcing people from their homes and damaging crops. Skies are overcast with smoke and soot is raining down across the area, further complicating the market outlook.

FECARROZ Names New President

The Central American Rice Federation (FECARROZ) held its General Assembly of Members last Friday, September 4, 2020. The representatives of the organizations of Rice Producers and Industries of the Central American Region and the Dominican Republic were present.

The outgoing President, from Honduras, Jason Hawit handed over the presidency to Ulises Espinoza of Nicaragua, for the next fiscal year.

The Officers for the 2020-2021 Board for Directors, is as follows:

President: Ulises Espinoza, Nicaragua.

Vice President: Eduardo Rojas, Costa Rica.

Secretary: José Tudo, El Salvador.

Treasurer: Sergio García, Guatemala.

Past-President: Jason Hawit, Honduras.

The Central American Rice Federation (FECARROZ) is the group in which all issues related to rice production in the region are addressed. Central America represents the second-largest export market for the United States of America, exporting approximately the equivalent of some 600,000 MT. of Paddy Rice annually within the framework of the CAFTA-DR Free Trade Agreement.

Congratulations to Ulises Espinoza on his selection as the new President of FECARROZ, shown here in a recent picture with the USRPA’s Dwight Roberts.

COFCO's Vice President Luan Richeng Elected as New CNAGS Chair

In the past few years, USRPA has maintained positive communication and a good relationship with the China National Association of Grain Sector (CNAGS), the largest association of the grain industry in China. On September 5th, the Sixth Member’s conference, the 1st of Sixth Council Meeting of CNAGS was held in Beijing. The conference elected the new board members with Luan Richeng as the chairman and Ren Zhi as the secretary-general and Shang Jinsuo as the chief overseeing officer of the new council. Past Chairman, Patrick Yu, also president of COFCO, whom USRPA delegation met during the trade mission to China in 2019, has moved to lead China General Technology (Group) Holding Co. Ltd.

New chairman, Luan Richeng, emphasized that food security is the eternal theme of the national economy and the people's livelihood, and is an important foundation for achieving economic development, social stability, and national security. The important task of ensuring food security must be shouldered. The new council will adhere to high-quality development as the fundamental requirement for the mission of the association, and participate in the construction of a new development pattern in which the domestic large-scale grain consumption is the main body and the domestic and international consumption promote each other.

USRPA wishes the best for our friends in China and is excited for many more opportunities in the future to work with their new leadership.