Challenges Abound to Market New Crop, Cover Production Costs – AgFax

With the harvest nearing completion, the long grain industry is on a precipice and not quite sure where to go. Rice prices remain firm, but the spot market is not as active as most producers expected after the harvest. That’s because the largest milled market for US rice is getting worse every day, as it’s nearly impossible to unload a ship in Haiti right now, even for NGOs trying to help the people in crisis.

If we look at paddy exports as a bright spot, the US continues to lose market share in Mexico to other countries of origin from South America, namely Brazil. The 80,000 tons of Iraq trade that has kept the factories busy has been for old crops, and the mill is coming to an end.

The domestic market has been the main savior, but with both Haiti and Iraq in the wings and prices significantly higher than the competition, it will be an interesting year to market this crop.

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After significant delay and discussion in Mexico, the federal government has released details about its recent anti-inflation program, previously published in the Rice Advocate. However, it remains unclear about the treatment of rice and in the meantime the length decree (link below) is interpreted as no real change. Any Mexican company with import history can access the license, while the import duty exemption is only valid for paddy rice.

The Mexican Federal Government’s decree exempting the payment of import duties and administrative facilities is granted to various basic basket goods and supplies that have been declared. The decree can be found here. A new USDA Gain report is coming on the decree.

These are the factors that fail to take into account the rising dollar value, making US exports more expensive, further undermining our ability to be price competitive with our Western Hemisphere counterparts. Trade is not a focus of the current White House administration, so there is significant headwinds in developing new markets and sustaining existing ones.

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On the ground, prices in Texas remain firm at $17/$18, but with limited activity. The same goes for Louisiana, where prices are $17. Mississippi, Arkansas, and Missouri are all vying for space for ships limited by low water on the Mississippi River, priced at $16/$17.

The market is also holding up in Asia. It remains an anomaly that rice prices have not experienced the same wild volatility as most other food grains. Thai 100% B is trading somewhere between $415 and $425 pmt this week, right in line with previous weeks. Vietnamese 5% is pegged to $430 pmt, which is also in line. India remains at $380 pmt, which is the “new” price since they made their tariff announcement.

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USDA’s weekly export report shows net sales of 11,200 tons this week, down 13% to Colombia (10,400 tons), Canada (400 tons, including 200 tons declines), Mexico (200 tons), Netherlands (100 tons ), and Micronesia (100 MT). Exports of 7,100 tons were also dismal, down 87% and mainly went to Canada (2,400 tons), Mexico (1,900 tons), Jordan (1,000 tons), the United Kingdom (900 tons) and Saudi Arabia (500 tons ).

The futures market was active this week, with average daily volume rising 16% to 1,448. Open Interest also rose 4.22% to 8,289.

Full report.


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