With positive gains demonstrated on most open contracts, the market appears to be transitioning into a stable if not upward pattern.
Fuente: agfax.com |
The rice market seems to have awakened from the slump of the past few weeks (months) with a decent dose of positive news since the last report. Arguably, some of the movement is attributable to the WASDE numbers released last week but regardless there is a hint of firmness in the market not seen in some time.
The export sales report was very impressive with significant gains in weekly net sales over the past few weeks. Vessel loadings were off as compared to last week’s volume, however this is not a particularly remarkable occurrence given the exceptionally low sales volume during the same time. The futures market responded quite well to last week’s numbers as well.
With positive gains demonstrated on most open contracts, the market appears to be transitioning into a stable if not upward pattern. The length and duration of the directional shift in prices remains to be seen. Cash pricing has followed suit with the futures market, posting net positive gains against the bids of the previous weeks as well.
It should be noted that the pricing ideas between buyers and sellers still remain very different and spread apart but this week’s movement is a step in the right direction. In the Asian markets, indicator pricing has posted gains as well. The most significant moves were in Vietnamese 5% and Pakistani 5% over the past week, with the other indicative prices mostly sideways.
Offshore prices have largely been attributable to currency fluctuations, with supply and demand factors influencing the specific gains in the market. USDA’s world market pricing has reflected the aforementioned factors in its weekly report also. Modest gains in the rough price estimate demonstrate the largest weekly gain in two months and the highest price estimate since October of 2016. Also worth noting is the continued gains posted in the price estimate since early November of 2016 lending credence to the hope that some of the worst pricing may be past.
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While it is entirely too early in the marketing year to say with any confidence that a key reversal is taking place, it is within the realm of possibility to state that an underlying plateau may be in the offing. As growers look ahead to the 2017 growing season, the uncertainty that is inherent at this time of year has only been compounded by the conflicting factors impacting the market.
On the positive side, the arguments include: the surge in weekly export demand, a pending Iraqi tender, stronger pricing in alternative crops, and the underlying tone of the market. Meanwhile, the negative forces impacting the trade consist of: a tremendous oversupply, quality concerns, policy uncertainty, and cash flow pressures.
Recognizing that neither list is exhaustive, there are still enough opposing factors in the marketplace to confound even the most objective analysis. Regardless, as the year progresses and the variables become fixed, the market situation will become clearer. Until then, growers should utilize any opportunities that arise to ensure that long term profitability remains a viable option.