The Rice Advocate, Vol. 18, Issue 10

Volume 18, Issue 10

March 12, 2021

In This Issue:

Rice Farmers in Field Planting the 2021 Rice Crop
Washington DC Update
From the desk of Dr. Mo Way

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Rice Farmers in Field Planting the 2021 Rice Crop

The cash market continued to erode as prices in Arkansas moved $0.50 per cwt lower this week. The story was similar in other states where lack of bids or demand led to prices softening. Texas paddy held steady, but mainly because that market operates based on its own fundamentals, which at this point imply moderate demand and scarce supplies moving into planting. As reported last week, higher prices are required in the immediate future to bolster long-grain acres, and that doesn’t appear to be happening.

Texas rice farmer Galen Franz takes advantage of the nice weather to get the crop planted on his farm near Victoria, Texas west of Houston.

As a result, we still expect to see substantial rice acres move into beans and corn this spring. This is a market that has several factors indicating reasons for prices to move upward but also reasons to soften. Mercosur harvest, quality issues, demand from Mexico, Central America, Venezuela, etc will continue to be monitored. Rice farmers in South Louisiana and Texas are in the field as new crop planting is underway this week while farther north in the delta fields are in full preparation weather permitting.

Total export demand for long-grain is down more than 11% year to date. The importance of paddy exports cannot be overstated in a year such as this, and they have proven stable despite the current market conditions. Meanwhile, the elasticity of demand for milled prices has been highlighted this year, as milled rice demand has plummeted with US rice prices trading at a premium to other origins. Between Iraq and Haiti alone, the US has seen a decline of 5.7 million cwts in long-grain demand (paddy basis) against last year. Although there have been further talks of Washington working on an Iraqi deal that could translate into significant long-grain sales, the industry has demonstrated a lack of faith in seeing that come to fruition with the market showing little reaction to the rumors.

This month’s WASDE report, published on March 9^th contained virtually no changes from the previous month. Historically speaking, the USDA isn’t in the habit of making remarkable changes to the balance sheet in mid-March, so this did not come as a surprise to the industry. However, following the March planting report and Rice Stocks report which are both set to be released at the end of the month, we can expect to see more activity in the April WASDE. Keeping in mind that long-grain stocks were up 18% year over year back in January and that demand has only slowed since then, it is probable that the USDA will raise their ending stocks forecast for the 2020/21 marketing year in the next report. It is also likely that there will be fewer reported acres and a lower carry out for the 2021/22 marketing year in their initial new crop analysis.

In Asia, prices backpedaled a few dollars per ton as the US dollar strengthened and Asian origins braced for the influx of freshly harvested supplies. Not that the world rice market anticipates a shortage in 2020/21, but based on the most recent WASDE report, the USDA does expect to see the lowest carryout in 3 years. Asian exporters will find less competition from South American origins which battle drought conditions and as rice loses out to other more profitable crops. Similarly, Asian exporters will also face less competition in the Middle Eastern markets from the US as growers opt to plant beans and corn to fill China’s ever-growing appetite.

World Agricultural Production

Monthly report on crop acreage, yield and production in major countries worldwide. Sources include reporting from FAS’s worldwide offices, official statistics of foreign governments, and analysis of economic data and satellite imagery. The report reflects official USDA estimates released in the monthly World Agricultural Supply and Demand Estimates (WASDE).

Current Report

Past Reports

Grain: World Markets and Trade

This monthly report includes data on U.S. and global trade, production, consumption and stocks, as well as analysis of developments affecting world trade in grains. Covers wheat, rice and coarse grains (corn, barley, sorghum, oats and rye).

Current Report

Past Reports

Washington DC Update

Today President Biden signed the $1.9 trillion Covid economic stimulus package (aka the American Rescue Plan) into law. The American Rescue Plan (ARP) passed the House and Senate without a single Republican vote. The House had cleared the final version of the bill on Wednesday by a 220-211 vote. Only one Democrat, Jared Golden of Maine, voted against the final bill. ARP provides $1,400-per-person payments to individuals with incomes up to $75,000 a year and couples making up to $150,000. The payments are phased down and then cut off after income reaches $80,000 for an individual and $160,000 for a couple. Democrats lauded the ARP as a way to provide assistance by putting money directly in people’s pockets, while Republicans criticized it was wasteful, unneeded, government spending.

The $1.9 trillion bill includes $22.7 billion in agriculture and nutrition provisions. In addition, it allows state and local governments to use the funding they will receive for rural development activities such as broadband and water and sewer infrastructure.

A much-noticed provision in the agriculture portion of the bill requires USDA to make payments to socially disadvantaged farmers worth up to 120% of their indebtedness on USDA direct and guaranteed loans. Although funding for the provision is uncapped, it is estimated that approximately 15,000 farmers will be eligible for relief and will receive payments averaging about $220,000 each.

The ARP also includes $3.6 billion earmarked to fund commodity purchases and to provide grants and loans to processors, farmers markets, producers and organizations to pay for needs such as workers' personal protection equipment and to retool operations to maintain and improve food and agricultural supply chain resiliency. Another $500 million is earmarked for grants to rural health care providers to compensate them for revenue lost due to the pandemic and to help with a range of needs, including the cost of testing and vaccine distribution. ARP will expand child nutrition assistance and extend the temporary 15% increase in Supplemental Nutrition Assistance Program benefits through September.

From the Desk of Dr. M.O. (Mo) Way

Well, from February 13-17, 2021 SE Texas suffered a major cold snap due to Winter Strom Uri. I know at the Beaumont Center temperatures dipped down to 16 degrees F for several days. I made some calls to selected crop consultants, farmers, and millers to find out if there were any losses to the Texas rice industry. From what I gathered, losses were minimal other than some broken water pipes and ground spray rig equipment. Some told me they were able to circulate dry, cold air throughout their storage bins which should help to control stored insect pests. Not so good was the fact that cattle ranchers lost young calves to the cold temperatures. In addition, crayfishing probably will be delayed some, which will shorten the crayfishing season. As far as insects, maybe Uri will knock out overwintering populations of the rice planthopper, an exotic, tropical pest we have observed attacking rice in SE Texas since 2015. This insect overwinters in the egg stage in grass foliage. Only time will tell if Uri did a number on these insects…

Ok…this is my last article for Rice Advocate. It has been a pleasure working with Dwight, Veronica, Trey, Bianca, Marcela, Grace, and the rest of the USRPA staff! Dwight and I go back many years and we hiked the same trails and mountains in the Pecos Wilderness! Guess what? Jeanie and I are headed back to New Mexico in the very near future! And I wish all my friends and colleagues in the Texas rice industry the best year ever in 2021!

REGISTRATION IS NOW OPEN!

The Rice Market & Technology Convention

will take place in The Woodlands, Texas

July 6-8, 2021

The Rice Market & Technology Convention is committed to the health and safety of its attendees and we will continue to follow CDC Guidance for Organizing Large Events and Gatherings. RMTC will provide attendees PPE such as masks and hand sanitizer, room layouts will be modified, and crowd limits will be enforced to adhere to the physical social distancing protocols.

Large, wide-open facilities and opportunities for outdoor gatherings make the Woodlands Resort the perfect place to network while allowing for social distancing.

If you have any questions or require special accommodations, please contact the USRPA at info@usriceproducers.com.