• By Scott Stiles •
Trade was sharply lower this week in rice futures and other Chicago Board of Trade grains. Specific to the rice market, the U.S. harvest overall is in step with the five-year average and luckily avoided what’s now Hurricane Grace.
Given there was a broad-based selloff in commodities this week, the most likely source of pressure came from the dollar index. The dollar has been trending higher since early June. However, on Thursday the index moved past some key chart resistance and rallied to a 9-1/2 month high.
The chart immediately below is a four-month daily chart of November 2021 rice futures. This week’s trading moved below key trendline support at $13.50.
If the November contract continues lower, it may find chart support at $13. Arguably rice is still very much in a “weather market” and can quickly turn higher on threatening tropical activity. Without such threats, continued dollar strength will create a headwind for rice and other commodities.
The graph below provides a look at new crop rice bids this month for delivery to mill points in Arkansas. As of Friday morning, bids had slipped 18 cents this week to $5.83 per bushel.
“In the midst of chaos, there is also opportunity.” The energy markets have not been spared from the commodities selloff.
Diesel futures have been in freefall since Aug. 1, slipping from $2.20 to $1.93 as of this writing. WTI (West Texas Intermediate) crude oil has dropped about $11 since Aug. 1 to $63 per barrel.
Thus, an opportunity has presented itself to cover diesel needs for the remainder of the year. A return to $1.75 may be an opportunity to lock in fuel for 2022. Watch closely.
NYMEX Diesel Futures, daily nearby contract.
In Monday’s crop progress, the National Agricultural Statistics Service reported the U.S. rice harvest at 12% complete as of Aug. 15. That is up from 7% the prior week and in step with the five-year average.
Arkansas and Mississippi were both at 1% harvested. Noticeable progress was seen in Louisiana, with harvest advancing to 55% compared to the five-year average of 57%. The Texas harvest was estimated at 38% done versus the five-year average of 51%.
Scott Stiles is a University of Arkansas Extension agricultural economist. He may be reached at firstname.lastname@example.org.