• By Scott Stiles •
For rice, it has been a shortened week of narrow trading ranges and declining volume. Open interest was leaking steadily this week out of the old crop July contract and building gradually over in the new crop September.
Trading ranges were narrow without much news and the September contract continued to find resistance near $13.60 this week. Planting is done. Weather conditions and the June 30 Acreage will help drive the new crop contracts. With no new crop sales reported as of yet, export data has not been exciting.
CBOT September 2021 Rough Rice Futures, Daily Chart.
CBOT September rough rice
With the calendar turning to June, traders will start to position themselves for the monthly WASDE (World Agricultural Supply and Demand Estimates) report that will be released on the 10th. We will also start to see more private estimates and positioning for the June 30 acreage report.
That is a key piece of information for the rice market going forward. As mentioned here in previous weeks, traders are expecting to see some reduction in 2021 rice acres given the historically high prices in corn and soybeans this year.
New crop rice bids / basis:
New crop basis at eastern Arkansas driers / local elevators remained firm this week at 16 to 23 cents per bushel under September futures. Fall delivery bids were in the $5.88 to $5.94 per bushel range as of Friday’s open. Basis at mills was 9 cents under September futures with bids at $6.01 per bushel.
U.S. crop conditions:
In this week’s Crop Progress the U.S. rice crop condition improved 3 points from the previous week to 74% good to excellent. Arkansas’ and Texas’ ratings slipped 1 point each to 77% and 52% G/E respectively. California, Louisiana, Mississippi and Missouri all saw better ratings.
U.S. rice condition
As a reminder, there is a weak correlation between crop ratings and production. In other words, it is nearly impossible to forecast a yield based on crop ratings alone.
What a crop condition rating can show is how much stress the crop has been subjected to. These numbers provided by National Agricultural Statistics Service are updated weekly and released each Monday afternoon throughout the growing season.
Rice export sales:
For the week ending May 27, long-grain rough rice sales totaled 6,680 MT, a 24% decrease from the previous week and a six-week low. Mexico and El Salvador were the only two buyers.
ong-grain milled sales were 3,267 MT. Mexico, Canada and Saudi Arabia made up almost all of the total milled sales. Haiti was absent from the buyers list. Nothing yet from Iraq.
There are nine reporting weeks remaining in the 2020/21 marketing year. Long-grain rough rice sales are running 12% ahead of last year, while milled sales are 25% behind.
Overall, long-grain sales (rough, brown and milled combined) are 4% behind last year. No new crop export sales had been reported by U.S. Department of Agriculture thru May 27. For comparison, none had been reported at this time last year.
Urea prices at the U.S. Gulf increased again this week, reaching multi-year highs. The trade indicates a strong demand for immediate delivery that has resulted in a supply squeeze.
First half of June barges traded up to $430 per ton this week. Historically high corn prices have added more acres this spring and the international urea market has been firm as well.
Chinese urea producers are showing little interest in exporting. Their domestic prices remain firm and urea inventories are tight. India is expected to make additional urea purchases in the upcoming weeks.
The graph below is updated thru May 28. From the week ending May 7, Gulf urea prices increased $32 per ton to an average $392. As mentioned, prices have continued higher for a fourth straight week moving above $400 per ton.
Scott Stiles is a University of Arkansas Extension agricultural economist. He may be reached at email@example.com.