In This Issue:
- High Ocean Freight Rates Complicate the Marketplace
- Washington DC Update
- USRPA Attends Virtual Mexico Micro-Regional Conference
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High Ocean Freight Rates Complicate the Marketplace
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At the risk of sounding repetitive, the cash market throughout the delta remains on ice. There have been very few trades reported over the past week, and buyers are generally lowering their offers as both paddy and milled rice demand are in the doldrums.
US long-grain exports lag the 2019/20 marketing year by more than 12%, and there is little sign of improvement on the horizon. The lack of demand in the Middle East and the Caribbean will be driving factors when it comes to scaling back rice acres this spring. Of course, the robust demand for feed grain commodities stemming from China’s growing needs will only serve to exacerbate that prospect, swaying famers more towards beans and corn.
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Despite a lag in U.S. long-grain exports, the South Louisiana Rail Facility had a record year with 165,000+ tons of paddy rice exported out of the Port of Lake Charles and the Lacassine Rail facility from the 2020 harvest, involving some 100 producers from SW Louisiana and East Texas. This effort cleaned out the farmers’ bins before new crop planting got underway.
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Asia long-grain prices traded sideways as Thai 100% B was recorded at about $525 per metric ton. Although export prices out of Asia have been largely unchanged for the past several months, they are maintaining their 15% premium to where they were trading 6 months ago. Freight rates and container shortages continue to be a significant pinch-point for dry bulk exports worldwide. The yearlong frenzy to secure panamax and smaller vessels to ship coal and grain has left many rice traders uncovered, and in some cases, has earned a premium for those that had bookings. Normally, the larger the vessel the more expensive it is to operate and secure, however, this year that has not been the case. Smaller and medium-sized vessels have been trading at premiums to even capsize vessels due to their versatility in their loading and unloading capabilities. As demand for grain unwinds most analysts predict the freight crunch will subside, but unfortunately, it will take some time before the slower demand works its way into freight prices. Therefore, while FOB prices for rice may begin to correct as the US dollar strengthens and harvests continue in Asia, delivered prices are likely to remain at elevated levels in the nearby due in part to freight constraints.
The futures market was flat to slightly up this week which is an indicator of weak interest in the nearby. Despite the average daily volume improving by 327 contracts against last week, open interest retreated to 9,059.
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World Agricultural Production
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High international commodity prices and government programs incentivizing small growers to produce basic grains are boosting Mexico’s total grain production, particularly of rice and wheat. Feed grain demand is expected to continue growing in 2021 for use in the livestock and poultry sectors, although demand for grain for human consumption is forecast to grow more slowly as the Mexican economy recovers from the impacts of the COVID-19 pandemic. In late 2020, Mexico published a decree that calls for a transition away from the use of the use of glyphosate and genetically-engineered corn for human consumption by January 31, 2024. To date, no concrete details have been given regarding timelines for implementation or the extent to which this decree will impact Mexico’s corn imports.
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Farm Workforce Modernization Act of 2021
Today the House is scheduled to consider H.R.1603, the Farm Workforce Modernization Act of 2021. Text of the legislation may be found here. This immigration bill would address the legal status of farm workers. Floor consideration of this separate piece of legislation reflects a change by Speaker Nancy Pelosi (D-Calif.) to adopt a piecemeal legislative approach to immigration. Previously there was a desire to enact comprehensive immigration reform.
Although the bill is expected to be passed by the House, Senate outlook is uncertain. Immigration legislation is being carefully scrutinized by both House and Senate Republicans given the current situation of large increases of unaccompanied minors and others entering the U.S.
PAYGO
House Democratic leaders may also consider this week a bill to block the massive across-the-board spending cuts which would result from the newly enacted $1.9 trillion economic stimulus package. PAYGO rules must be waived in order to avoid the budget sequestration reductions in farm bill programs as well as many other areas of the government. The House is expected to easily pass a waiver on PAYGO, the Senate is less certain given that at least 10 Republicans are needed to pass the measure in the Senate. In the past, the waiver was inserted into must-pass legislation as was done for the 2017 tax bill.
Sequestration cuts are a result of limitations enacted in 2010 under pay-as-you-go rules, which require Congress to offset the cost of each piece of legislation. Both parties have repeatedly waived the requirement to avoid the cuts with other major reconciliation packages. Democrats joined Republicans to avert $150 billion in cuts that would have been prompted by the 2017 tax overhaul, including a $25 billion chunk from Medicare. Congress also waived any reductions when it came to Obama-era stimulus legislation and multiple tax cut packages under George W. Bush.
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USRPA Attends Virtual Mexico Micro-Regional Conference
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This week, Bianka Rodriguez, USRPA Marketing & Western Hemisphere Promotions Director along with Grace Wang, USRPA Eastern Hemisphere Promotions Director, and FAS Officers and Cooperators attended the Virtual Mexico Micro-Regional Conference. The Mexico Micro-Regional conference – General Strategic Planning consisted of a two-hour program moderated by Erick Kuss, Director of Agricultural Trade Office, ATO, Mexico City. Holly Higgins, Rhiannon Elms, and Daniel Alvarado, Paul Trupo, and Karisha Kuypers were part of the selected group of speakers. The session focused on updating Posts’ analysis of the market’s strengths, weaknesses, opportunities, and threats, and ended with shared action items.
US Rice Producers Association is proud to have close working relationships with Post throughout the world.
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Don't Miss RMTC's Early Bird Pricing of only $600 USD
valid through March 28
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The Rice Market & Technology Convention
will take place in The Woodlands, Texas
July 6-8, 2021
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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.
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COVID-19 Legislative Update
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Food & Ag Regulatory
and Policy Update
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25722 Kingsland Blvd.
Suite 203
Katy, TX 77494
p. (713) 974-7423
f. (713) 974-7696
e. info@usriceproducers.com
www.usriceproducers.org
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Send us updates, photos, questions or comments!
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USRPA does not discriminate in its programs on the basis of race, color, national origin, gender, religion, age, disability, political beliefs, or marital/family status. Persons with disabilities who require alternative means for communication of information (such as Braille, large print, sign language interpreter) should contact USRPA at 713-974-7423
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