U.S. Agriculture Under Extreme Pressure

US RICE PRODUCERS

KATY, TEXAS

Louisiana and Texas have moved through much of their harvest, both now more than 75% complete as of this writing. Milling yields and field yields in Louisiana are strong, a welcome reprieve from what has otherwise been a steady stream of bad news. Texas, by contrast, is seeing somewhat inconsistent milling results, with harvest moistures declining in the fields due to various types of inclement weather. The bulk of the market will ultimately come from Arkansas, which is still less than 25% harvested and has little to report at this stage. Overall, harvest is well ahead of last year at this time, though we expect conditions to even out as Arkansas begins harvesting in earnest. Currently, 74% of the crop is rated good to excellent, 22% fair, and only 3% poor. This is encouraging, as harvest conditions will be the key factor shaping expectations from here forward.

 The market in Asia remains dismal, with no signs of improvement. Political unrest is growing among Thailand’s rural farming community as milled prices have fallen below $360 pmt, leaving farmers under significant strain. Thai exporters continue to grapple with an oversupplied global rice market, and no relief is in sight. Vietnamese prices have proven slightly more resilient, holding steady near $390 pmt, while India remains firm around $380 pmt. The broader six-month trend has been one of convergence toward the lowest-price leader, an unwelcome signal for both Vietnam and India.

 In the Western Hemisphere, prices are higher, but competition is just as intense. Markets that have historically been reliable U.S. customers are being actively courted by Argentina, Paraguay, Uruguay and Brazil. U.S. long grain continues to be priced above competing origins, while also struggling with inconsistent quality relative to buyer expectations. U.S. paddy at NOLA has been reported as low as $300 pmt, while milled rice is closer to $575 pmt. Old crop rice stocks continue to weigh on farm prices as well.

 On the ground, reported cash prices are $12.50/cwt in Texas, while Louisiana is trading at $11.75–$12.00/cwt. Arkansas, Mississippi, and Missouri are reported at $10.75–$12.00/cwt where available. The most recent stocks report has had a bearish effect on the futures market, with average daily volume steady at 2,610, and open interest down 2.35% to 11,811.

 The pain the rice industry is experiencing is not unique – the entire agricultural complex in the United States is under extreme pressure. The general consensus is that without additional federal funding, nearly one in three farms could be up for auction by next spring. The provisions in the new Farm Bill are great, but U.S. ag producers and the allied industries need relief sooner than that. Players like India and China have distorted agricultural flows in recent years, and U.S. food producers are taking a brunt of the hit.

 The weeklyUSDA Export Sales reportshows net sales of 16,400 MT this week, primarily to Japan (14,700 MT), down 39% from last week. Exports totaled 34,600 MT, down 45% from the prior week, with shipments primarily to Japan (13,500 MT), Haiti (6,000 MT), Honduras (5,500 MT), Mexico (5,400 MT), and Canada (2,100 MT).   ∆

US RICE PRODUCERS

 

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