Over the past few weeks, cash prices throughout the Delta have exhibited minimal change. In fact, the only real exception is Texas where the industry has seen a 3% bump in pricing which is offered only to higher quality rice. Poor milling yields that are being recorded at less than 48% in some cases, and with damaged kernels exceeding 3% brokens, it is no surprise that buyers are willing to offer premiums for higher quality rice.

There is just enough business to keep steady trading in the lower Delta without creating a pressure point that could result in appreciating prices. Of course, this narrative could quickly change if Brazil or Iraq entered the scene. So far, however, those destinations both appear to be in the wind at the moment.

This week the USDA released their December World Agriculture Supply and Demand Estimate report, which as expected, contained only minor changes. Long grain production and domestic use were left unchanged from the previous month. Export demand, however, was lowered by 2 million cwts to 67 million cwts. Based on the latest export sales data, this reduction in export demand is warranted. The 2020/21 marketing year has struggled to extend the early momentum caused by the slough of Brazil sales; currently, paddy exports to Mexico are off by 35%. On the milled rice side, the notable markets with slower demand are: Haiti down 37%, Canada down 16%, and the Dominican Republic trailing 94% against last year.

Leaving all of the other variables constant, the net impact to the US long-grain balance sheet was an additional 2 million cwts of carryout, and ironically, a $0.20 per cwt increase in the season-average farm price forecast, now at $11.80 per cwts.

The story was similar in the medium & short grain sector, where revisions were also relatively negligible. The only change involved a reduction of imports as production was left untouched, but supply was lowered to 800,000 cwts. Overall, the USDA still projects better pricing for Southern medium grain in 2020/21 and lower prices for Calrose.

In Asia, Indian exports have continued to increase in recent months based on new interest from China on account of lower prices. China is looking to import significant amounts of broken rice from India for the first time in several years.

Thai and Vietnamese prices have remained relatively stable in recent weeks, holding between $490-$500 PMT. In Thailand, despite the main crop harvest being slightly delayed, there is an expectation of increasing the crop size by around 5%, up to 9.2 million hectares (22.7 million acres). The higher price of Thai rice throughout the year, typically $40-$50/mt over Viet rice, has resulted in a 31% decrease year over year from Jan-Oct, which totals 4.5 million metric tons. There was a boost to exports starting in November, which should help their total exports through Q4 of 2020, but projections still place Thai exports down 29% YoY from 2019, at 5.4 million metric tons in total.

In South America, prices were mostly stable or declined in November, with an exception of Peru, where prices increased due to the reduced harvest in the third quarter of the year. In Colombia, the primary harvest was above average, which continued to slightly push prices down in November. Nevertheless, prices were still up compared to a year earlier with strong demand amid the COVID-19 pandemic. The sharp depreciation of the local currency in the first quarter of the year raised costs of mostly imported agricultural inputs, exacerbating the year-on-year price increases.

In Brazil, prices have remained relatively consistent. Low availabilities were offset by a weakened retail sector and larger imports in the last two months. Before that, however, their prices were well above prices at the same time last year, reflecting the strong export sales in the April-October period. Planting of the 2021 paddy crop was recently completed and the output to be harvested in March, is forecast to be similar to the last year’s reduced level due to below-average cropping areas.

Prices also continued to decrease in Ecuador due to improved market availabilities from the ongoing minor season harvest and their levels were lower year on year mainly reflecting the increased outputs on a yearly basis. Prices held steady in Uruguay, remaining more than 25 percent higher than a year earlier due to the strong export sales in the January-October period.

In the freight market, covid-related logistical issues at the port have become commonplace across all industries. China has received much of the blame because of their monopolization of the container market as a result of their insatiable demand for corn and soybeans from South America. But now with good news on the vaccine front, container freight rates are soaring on a consumer goods boom. The US, Europe, and the rest of the world are restocking durable goods and inventories in the expectation that the vaccines to help the world “turn back on.”  But with this restocking, significant problems are emerging in UK container ports specifically, with some reports indicating that some lines can’t unload at all. This push-pull effect has caused a massive build-up of containers in some regions, and severe shortages in others. The result has been increased delays and increased prices.

President-elect Joe Biden announced plans to nominate former Agriculture Secretary Tom Vilsack to be Secretary of Agriculture.

Tom Vilsack is a former two-term governor of Iowa who served as Secretary of Agriculture for all eight years of the Obama-Biden Administration. Unanimously confirmed by the Senate to lead the USDA in 2009, he oversaw record-breaking investments in rural communities, secured vital improvements to the nation’s school meal system, and led a successful campaign to increase food safety standards during his tenure. Vilsack also served as Chair of the first-ever White House Rural Council, where he helped drive critical financing opportunities to rural businesses and entrepreneurs.

As the 40th Governor of Iowa, Vilsack led the charge on major infrastructure investments, implementing a successful program that spurred the creation of popular projects across the state. He worked across party lines to help create the Grow Iowa Values Fund, an initiative to invest in the state’s entrepreneurs and spark economic development.

Prior to his tenure as Governor, Vilsack served as Mayor of Mount Pleasant, Iowa, and in the Iowa State Senate. Originally from Pittsburgh, he received his bachelor of arts degree from Hamilton College and his JD from Albany Law School.

Marcela Garcia, USRPA's COO welcomed the audience and introduced the speakers, including Dwight Roberts, USRPA CEO, who commented on the U.S. rice market and moderated the event. Yamila Saiz, past President of CONMASUR-Argentina, (Confederation of Mercosur Rice Mills) and Business Manager of Ibera Mercantil S.A., updated the audience on Rice in Argentina. Tiago Barata, Executive Director of Sindicato da Indústria do Arroz do Estado do Rio Grande do Sul, presented a Brazilian Market Outlook. Reinerio Franco, Vice President of CONMASUR-Paraguay and Principal of Agriplus S.A., presented Paraguayan Rice: Analysis of The Current Situation and Future Perspectives. Finally, Jose Maria Gomez, new President of CONMASUR-Uruguay and Principal at Glencore Agriculture presented, Uruguay: Rice Country.

USRPA plans to have one more virtual session before the end of the year, scheduled for December 15, 2020. You can learn more and register at www.RiceMTConvention.com. USRPA will post presentations and recorded videos on the RMTC website.

Follow us on Facebook, and LinkedIn for updates on future virtual sessions and for news on RMTC 2021!

This week USTR announced it reached a limited trade deal with Ecuador. Ambassador Lighthizer traveled to Ecuador on Tuesday to sign the new Protocol on Trade Rules and Transparency, signaling an important step in establishing closer economic ties with Ecuador.

The protocol includes provisions to streamline customs processes at the border, including with respect to the processing of SPS certificates, and provisions for good regulatory practices, among others. The protocol does not include tariff concessions, SPS disciplines, or other provisions typical of an FTA that requires congressional approval.

The full text of the U.S.-Ecuador TIC Protocol on Trade Rules and Transparency can be found here.

A fact sheet on the Protocol can be found here.

Also this week, the U.S. government exercised rights under USMCA to address Canadian measures that harm U.S. dairy farmers. According to USTR, the U.S. is challenging Canada’s allocation of dairy tariff-rate quotas (TRQs). Canada has set aside and reserved a certain percentage of dairy TRQs exclusively for processors, undermining the ability of American dairy farmers and producers to utilize the agreed-upon TRQs and sell a wide range of dairy products to Canadian consumers.

Improved access to the Canadian market for U.S. dairy producers was a key agricultural victory for the Trump Administration in USMCA. This challenge represents the first ever enforcement action under USMCA to ensure compliance with the agreement. If the United States and Canada are not able to resolve the United States’ concerns through consultations, the United States may request the establishment of a USMCA dispute settlement panel to examine the matter.

The top Republican on the House Ways and Means Committee Kevin Brady (R-TX) released the following statement: “Amb. Lighthizer is right to use our powerful new dispute settlement system in USMCA to challenge Canada’s discrimination against American dairy products. I look forward to continuing to consult with the Administration and American stakeholders as we stand up for the rights of American producers and workers in those cases where Canada and Mexico fall short of their obligations, such as on energy, biotech, trade facilitation, regulatory issues, and digital trade.”

Last week, House leadership announced committee chairs for the 117^th Congress. Rep. David Scott (D-GA) was selected to be the next Chair of the House Agriculture Committee with Rep. Glenn "GT" Thompson as Ranking Member.

Rep. Scott has served on the committee since 2003, most recently serving as the Chairman of the Subcommittee on Commodity, Exchanges, Energy, and Credit, and will be the first African American chairman of the committee. “I am honored to have been chosen by my colleagues in the Democratic Caucus to serve as Chairman of the House Agriculture Committee,” said Congressman Scott. “I was born on my grandparents’ farm in rural Aynor, South Carolina, during the days of segregation, and the hardships, of those, on whose shoulders I now stand. I owe this historic selection as the first African American Chairman of the House Agriculture Committee to a diverse coalition of members from across our nation. And I will use this critical opportunity to represent the values of our entire caucus and advance our priorities for trade, disaster aid, climate change, sustainable agriculture, SNAP, crop insurance, small family farms, specialty crops, and rural broadband. The fault lines dividing our rural and urban communities are running deep, and climate change is now threatening our nation’s food supply. As Chairman, I will lead the fight to rise up and meet these challenges.”

Rep. Thompson has been a member of the House Agriculture Committee since he was elected in 2009 and most recently served as Ranking Member of Subcommittee on General Farm Commodities and Risk Management.

He also says the committee will be focused on passing mandatory livestock price reporting legislation, working to expand domestic and foreign markets, passing bills to make agriculture more “resilient” in the face of the COVID-19 pandemic, and expanding rural broadband. Incoming representatives will have a lot to learn with work on the upcoming 2022 Farm Bill likely kicking into high gear in 2021.