Rice Update: Quiet Market Making Planting Decisions Difficult
Fuente: agfax.com / From The Rice Advocate, U.S. Rice Producers Association |
Another quiet week has come and gone in the rice industry with very little new to discuss since the last report. The cash markets have been very stable and in some cases have gone dormant. This is not terribly surprising as the already low prices at the farm level are not likely to drift any further down with any reasonable expectation of a sale at this time. For some areas both buyers and sellers have backed away resulting in a true market stalemate.
The world market price estimate for the week held constant for the long grain varieties, but medium grain saw a notable increase over the previous weeks’ values. This marks the first time in months that one projection was changed without a corresponding adjustment in the other.
Export sales were also slightly off over last week’s volume. As noted in the previous report, these numbers are still not significantly negative so long as the total tonnage picks back up in the next week or so. Similarly, vessel loadings are likely to surge as previous sales are shipped against in the coming weeks. Overall, the report was not encouraging but could have been much more bearish.
Asian pricing has been sideways also. Vietnam has been in the midst of a national holiday for the past week which has prevented any indicator bids from entering the market, however given the minimal fluctuation amongst the remaining representative qualities it is unlikely to significantly change either.
The futures market was also unable to deliver any appreciable positive news. As opposed to last week’s trading which settled out near a net zero on price, this week’s action saw the market drift down an almost uniform 2.25%-3% in value. Unlike the previous week, this week also saw a gradual decline as opposed to the up-and-down volatility. All in all, it would appear that the market has taken a brief hiatus.
From a growers standpoint this is probably a good thing as it allows farmers to focus on getting ready for the new crop year. At the farm level, many decisions are being made and last minute field work completed prior to planting. Some growers in Texas and Southern Louisiana are looking to start putting seeds in the ground as early as next week.
Acreage across the board remains a big question mark at this time as well. Many farmers (and bankers) are looking to take advantage of higher soybean pricing in order to help balance the financial statement for 2017. As such, soybean acreage will likely be higher that last year’s expectations. It is important to note that in order to capitalize on current pricing, the use of forward contracts, cash forward sales, or futures and options marketing tools must be utilized early in the year.
For rice, it is generally expected that the acreage estimate will be reduced from last year’s levels although the exact magnitude is unknown. The true acreage will have a significant impact on the 2017 pricing equation and as such will bring some additional volatility to the market. Use of the aforementioned marketing tools and methods will pay positive dividends for rice as well.
As producers move forward into the new crop year, constant attention will be required throughout in order to maximize the opportunities as they present themselves.