USDA Projects Higher Rice Acres Than Industry Analysts

Volume 18, Issue 19

May 14, 2021

In This Issue:

USDA Projects Higher Rice Acres Than Industry Analysts
Jewel Bronaugh's Nomination as Deputy Secretary of Ag is Cleared for Senate Floor Consideration

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USDA Projects Higher Rice Acres Than Industry Analysts

With little interest among sellers or buyers to transact, the cash market was left to trend sideways this week. At this point, growers are still fixated on planting and marketers are focused on executing past orders. The USDA posted their first 2021/22 estimates in this month’s WASDE which was generally uneventful. Although the USDA doesn’t publish their acre projection in the May WASDE report, the institution does provide a total production estimate which can then be worked backward. After doing so, it appears the USDA’s projection is considerably higher than the industry’s 1.85 million-acre figure for long grain. California acres look set to be 400,000 acres or lower this season, marking the lowest output since 1992.

As for use, the USDA lowered its demand estimates for both long grain and medium/short grain rice this year, a typical reaction to lower acreage. Overall, the department expected better pricing for US rice in 2021/22. One factor that is expected to soften the blow on the supply side or even keep a lid on domestic prices, is the infiltration of foreign rice into the US. Rice imports have grown substantially over the past two decades and now rice imports look poised to reach 38 million cwts, the bulk of which are aromatic varieties.

Earlier this week the Mississippi River hit a snag and was forced to close vessel traffic near Memphis due to a crack in the Interstate 40 Bridge that links Tennessee to Arkansas. This caused substantial delays for grain working its way down to NOLA. Fortunately, on Friday, the Tennessee Department of Transportation was able to provide information that eased the Coast Guard’s concern, allowing the agency to reopen the river to all vessel traffic without restrictions. Soybean shipments are currently slow, unlike corn shipments which have bottlenecked due to this incident. Most are optimistic that the supply chain should be back to its normal state within a week.

In Asia, export prices were mixed this week as Thai 100% B prices ticked upward to $480 FOB while Hom Mali and Basmati prices slipped $20-30 per ton. Vietnam and Myanmar prices held steady as did the prices in the Mercosur region.

Long grain demand improved this week yet remained down just over 8% from last year. Sales to Mexico, Canada, Guatemala, and Saudi Arabia were all integral in supporting higher year-over-year demand this week.

In a surprising turn of events, rough rice futures turned down this past week despite a weakening dollar and a WASDE report that wouldn’t seem to support such action. The nearby contract lost 4% against the previous week and the further out contracts didn’t fare much better. Open interest was up slightly this week, but the average daily volume took a sizable hit and was down 26%.

SE Texas Rice Farmer, Galen Franz, was flooding his fields of Presidio this week. Franz is a member of the Texas Rice Council and the USRPA Board of Directors as well as the Texas Rice Producers Legislative Board.

Jewel Bronaugh's Nomination as Deputy Secretary of Ag is Cleared for Senate Floor Consideration

On Monday, May 13^th, U.S. Senators Debbie Stabenow (D-Mich.), Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, and John Boozman (R-Ark.), Ranking Member, announced that the Committee had voted by voice vote to advance the nomination of Dr. Jewel H. Bronaugh to serve as Deputy Secretary of Agriculture. Dr. Bronaugh may now be considered by the full U.S. Senate for confirmation. Bronaugh is currently serving as the Commissioner of the Virginia Department of Agriculture and Consumer Services. Previously, the Senate Agriculture Committee held a hearing on Bronaugh’s nomination on April 22, 2021.

Currently, there are several other nominees awaiting committee consideration:

Robert Bonnie has been nominated for Undersecretary for farm production and Conservation Programs. Bonnie served as the co-chair of the Biden Administration’s USDA transition team. Bonnie has also been the vice president for land conservation at the Environmental Defense Fund.

Janie Hipp has been nominated for USDA General Counsel. Hipp is currently the CEO of the Native American Agriculture Fund and was founding director of the Indigenous Food and Agriculture Initiative at the University of Arkansas. Hipp served in the Obama administration and served on Biden’s transition team.

Jenny Lester Moffitt has been nominated for Undersecretary for Marketing and Regulatory Programs. Moffitt currently serves as Undersecretary at the California Department of Food and Agriculture. Prior to her tenure at the CDFA, Moffit was involved with a family organic walnut farm and processing operation.

Currently, Secretary Vilsack is the only Senate-confirmed Biden administration official at USDA.

Tax Reform

The House of Representatives Committee on Ways and Means held a hearing this week which included a variety of tax proposals. The House Ways and Means hearing focused on Biden’s tax proposals. According to an analysis of Biden’s tax proposals by the Tax Foundation the Biden proposal to tax capital gains at death accounts for about one-third of the revenue to pay for the Administration’s American Families Plan, a sweeping package of education, health, and child care benefits. The tax on inherited assets would raise $213 billion over 10 years. The revenue impact increases by year, reaching nearly $40 billion in 2031.

Three issues receiving much focus by agriculture groups are:

Stepped-Up Basis: Assets in agriculture are typically held by one owner for several decades, so resetting the basis on the value of the land, buildings, and livestock on the date of the owner’s death under a step-up in basis is important for surviving family members and business partners to ensure the future financial stability of the operation.

Like-Kind Exchanges: Allows businesses to buy and sell like assets without tax consequences, thus helping farmers and ranchers, who are typically “land rich and cash poor,” maintain cash flow and reinvest in their businesses.

Sec. 199A Business Income Deduction: Preserving Sec. 199A business income deduction in order to maintain a reasonable level of taxation for pass-through businesses.

Known as the most widely attended conference in the Western Hemisphere, the Rice Market & Technology Convention is returning to the Lone Star state July 6-8, 2021 at the Woodlands Resort & Conference Center, just 30 minutes north of downtown Houston, Texas, and 25 minutes from George Bush Intercontinental Airport.

With large open meeting spaces and plenty of outdoor activities, the Woodlands Resort is the perfect place to safely return to in-person networking events.