Volume 18, Issue 30

August 6, 2021

As prices continue to soften in Asia, harvest is getting underway in the United States. Despite the later-than-normal start, the U.S. is finally getting its footing as combines hit the field in Louisiana and Texas. While the wet weather is still causing slowdowns in Louisiana, the Texas harvest is clipping along, though initial yield reports aren’t quite as high as hoped. That could be countered, however, by field reports out of Arkansas that display significant optimism at the coming harvest. In Arkansas, the crop is reported as 22% excellent and 44% fair, where, in Louisiana, it is only 3% excellent, and 71% fair.

With the new crop just ahead, the 33 million cwt carry-over reported by the USDA is a concern, and the 120,000 metric tons of rice recently booked to Iraq certainly helps. However, more business must materialize—either to Central or Latin America, or to Haiti—in order to provide any upward momentum in pricing expectations, despite a short crop on account of weather coupled with high corn and bean prices.

There was a significant revision in the World Market Price this week that justifies attention and explanation. From last week’s report to this week’s report, milled price and rough price dropped from $15.92 and $10.18, down to $15.13 and $9.63, respectively. While those involved know this isn’t true from one week to the next, it is important to note that the USDA has updated their algorithms for the new marketing year, which includes the values for their costs of bagging, milling, and exporting milled rice. The updated price, with its downward revisions, also incorporates 2021 loan rates, milling yields, and byproduct prices. The price was decreased by 4.9% for milled long grain rice, and 5.4% for rough rice.

In Asia, prices continued to soften all around with Thai 100% B registering at $385 mt FOB, surprisingly Vietnamese 5% now as allow as $379 mt FOB, and Indian rice, still holding firm, at $385 mt FOB. The new crop harvest ominously hangs over the market as demand wanes, supply is increasing, and freight costs suppress the ability for any upward price movements. The Philippines remain a key buyer in the region, as does West Africa, but not in volumes that will help bolster price in the near term.

In line with weakening Asian pricing, the FAO Rice Price Index notched a two-year low of 101.2 points in July, down 6.6% from last month, and 8.2% from a year ago. The FAO, like many exporters and industry members alike, place the reduced price, not on quality or over-supply of rice, but the simple ardent fact that containers, boats, and logistics are simply too costly to maintain a “normal” price target. COVID-19 has been the punching bag for all excuses, and all involved can only hope that the situation will resolve itself efficiently and promptly in the days ahead.

The USDA Export Sales report posted total sales of 101,000 metric tons, 33,800 tons of which, was long-grain rough to Mexico, and 66,900 tons of long-grain milled to Iraq. The balance was smaller amounts to Haiti and the DR. The Export shipments totaled 43,100 metric tons, with Mexico again taking the lead with 27,600 tons of long-grain rough, 4,400 tons of medium grain rough, 600 tons of long-grain milled, and 100 tons of medium grain milled.

Futures, despite their slight bump on news of the Iraq sale last week, have subsided and settled back into the lows of $13.15, as opposed to the “hype prices” that materialized as high as $13.85 last week. Unless there are doomsday reports that come from Arkansas in the weeks ahead, it is likely we won’t see any significant spikes in futures unless it is correlated with a surprise spike in demand. Average daily volume was up 7.86% to 732, and Open Interest up 6.03% to 7,720.

The Senate Appropriations Committee’s agriculture spending proposal increases spending by $2.46 billion over FY2021 spending levels for a total of $25.9 billion for FY2022. The path forward for the spending proposal is rocky as the Senate has yet to approve a budget resolution that would provide an agreement on overall spending levels. Republicans in both the House and Senate are currently concerned with the domestic discretionary spending levels compared to defense spending levels. An agreement on spending levels must be reached before October 1^st, otherwise, a continuing resolution must be enacted to avoid a government shutdown. 

On 8-4-2021, a notice was published in the Federal Register by the EPA and the Army Corps of Engineers to provide a process to receive feedback on a variety of issues related to the “waters of the U.S.” definition. The agencies are requesting comments on such issues as when ditches should be regulated by the Clean Water Act and how prairie potholes and other intrastate, non-navigable waters should be treated.

The public meetings will be held as web conferences in August 2021, with one date reserved in September, if needed. Registration instructions can be found at on the EPA's website here: Public Outreach and Stakeholder Engagement Activities | US EPA

On August 5, 2021, the Senate Agriculture Committee is scheduled to hold confirmation hearing on Homer Wilkes, nominated to be Undersecretary for Natural Resources. For hearing information, here.

CANCELLED: Arkansas Horizon Ag Field Day

CANCELLED: RiceTec Arkansas Rice Field Day

CANCELLED: University of Arkansas Rice Field Day

CANCELLED: University of Arkansas Rice College

CANCELLED: Missouri Rice Research & Merchandising Council Rice Field Day

University of Arkansas Rohwer Field Day: Rohwer Research Station, Rohwer, Arkansas

34th Annual Arkansas Agricultural Hall of Fame Induction Luncheon: Embassy Suites, Little Rock, Arkansas – event details and tickets

The 84th International Rice Festival: The rice festival will return to Crowley, Louisiana, after being canceled last year due to the COVID-19 pandemic.