Prices continue to decline as mills desperate for export business discount offers in an effort to attract buyers, but to no avail. The cash market continues to be bearish, a result of the general lack of demand offshore for long grain milled rice.
Prices have dropped significantly over the lastthree to four months and completely retracing all of the record gain of the first and second quarters of 2008, only to return to the same price as one year ago. The Creed Rice Market Report (CRMR) dated February 20, 2008 had #2-4% milled rice posted at $25.50 per cwt FAS, exactly to the penny where CRMR is quoting today’s market as reflected by offers of $575-585 per mt bagged FOB or $550-560 basis bulk.
In South Louisiana, sales reported at $21/barrel ($12.98/cwt) FOB farm basis No 2/62/70, which computes of $12.73/cwt for No 2/55/70. In Texas, bids dropped to $5.50 over loan for non hybrid rice and $4.50 over for hybrid rice, with limited or no sales. In northeast Louisiana, sales reported at $12.85/cwt delivered to barge for No 2/55/70.
The medium and long grain markets are like being in two different worlds. The medium grain rice market continues to go higher, while the long grain market continues to trend lower. Medium grain received a further boost this week with an announcement from the Egyptian Trade Ministry that Egypt will extend a ban on rice exports indefinitely. The severe drought in Australia has taken them out of the medium market.
In California, sales of 2008 medium grain rough rice were reported this week at $23 over loan, which computed to $29.38/cwt ($47.47/barrel) basis No 2/55/70. In South Louisiana, large acreages of medium grain have been contracted for 2009 and 2010 at $28/barrel ($17.28/cwt) for No 2/62/70 for delivery in September-April. Traditional long grain producers in Texas have been contracting acreage for medium grain production in 2009 at $9 over loan for delivery by the end of December. In North Louisiana, long grain producers have also been contracting medium grain for 2009 and 2010 at $17.48/cwt.
In its’ Feb. 10, 2009 supply/demand report USDA lowered projected exports by 3 million cwt to 98.0 million cwt, while leaving all other projects at last month’s estimate. Ending stocks are now projected at 26.2 million cwt, up 3 million. Season average farm prices were lowered slightly to a range of $16.00 to 17.00/cwt.
U.S. and Thailand prices are currently quoted at about the same level $585/mt. U.S. rice is now competitive with Asian suppliers. There is a large pent up export demand, however export buyers are holding back as they see weakness in prices. Competitive prices in the U.S. should promote increased export sales in the coming weeks. Milling activity should be picking up soon.
For more information, contact Alfred Guidry, county agent, St. Martin Parish, at 332-2181.