Japanese Trade Agreement Highlight Of The Week
US RICE PRODUCERS
KATY, TEXAS
The rice market itself is holding steady, with cash prices calm and milling steady for domestic, Iraq, and Haitian business. The fireworks are certainly coming out of DC right now, as the Trump trade deals are coming in hot and heavy. There have been deals made with Indonesia and the Philippines, both positive for the U.S., but they will have minimal impact on the U.S. rice complex.
Most recently announced is the Japanese trade agreement, which does have a focus on increasing imports of U.S. rice in a significant manner. As we understand it at this point (things are always changing), Japan has a 682,000 metric ton import quota of tariff-free rice. The current U.S. share is 327,000 MT, or 48%. The new trade deal preliminary outlines that the U.S. will receive an increased allotment of this 682,000 MT, thereby increasing its “piece of the pie” in the coming years. This almost certainly means an increase in MA (minimum access) business, and possibly an increase in SBS business (simultaneous buy-sell). Thailand typically exports about 270,000 MT to Japan under the agreement (40%), and Australia around 68,000 MT, or 10%. While this is great news for the rice producers on the West Coast, there are other victories for long-grain producers coming from the UK, and potentially the EU and other Latin American countries soon.
In Asia, the carnage continues with prices well below $400 pmt. Thailand and Vietnam are both now being quoted in the $380-$385 pmt range. These prices, even a year ago, were unthinkable. It was well known that the release of Indian rice was going to distort pricing, but to this extent would have been only a guess to the most discerning prognosticator. While there is an indirect impact of these low prices coming out of the Eastern Hemisphere, the US is fortunate to still have prices being quoted at $650 pmt. However, as the Export Sales report will show below, there isn’t a lot of buying at that level.
On the ground, there is some concern about the coming harvest because of the heat, but there’s not much to be done about it at this point. TheUSDA Crop Progress Reportas of July 20 is shows a positive trend is in line, as 79% of the crop is in good/excellent condition, where last week it was 77%, and last year 83%. California is showing 90% in good/excellent condition, where growing conditions have been favorable so far this year, but a cold spell has some producers worried about the maturation of some fields. Texas leads the pack of rice headed with 87%, then Louisiana at 83%, followed by Mississippi, Arkansas, and Missouri at 66%, 36%, and 25%, respectively. California shows 25% headed.Early harvest reports out of southwest Louisiana are generally positive, both with field yields (45-55 bbls per acre) and milling quality (59-60% whole grain). Varieties include Avant, Max Ace, PVL03, and DG263. The South Louisiana Rail Facility (SLRF) has shipped paddy rice with good milling yields of 55 or better this week to Central America. ∆
US RICE PRODUCERS