What is in this article?:
- Record U.S. rice acreage in 2010.
- Fallout from poor quality 2010 rice crop a concern.
- Expectations for rice lag behind more bullish commodities.
2010 milling “got off to a fast start. We sold to Iraq early and millings were at record pace. We’ve since fallen off. At one point, overall millings were over 20 percent from a year ago. We’re now down to 17 percent. Medium-grain is up 12 percent and long-grain is up 19.”
Brothers projected that long-grain decline will continue “without more export sales on the books. At Riceland, we’re already beginning to cut back.”
In its Dec. 1 report, the USDA long-grain stock number came in at 273 million bushels — up 19 percent. That’s led some to suggest the crop is overstated.
Brothers disagreed. “When I look at projections of the crop and the increase — and the disappearance of the crop which should have been massive between harvest and December (and it’s still up 19 percent on stocks) — that doesn’t suggest to me that the crop is overstated.”
Export sales have seen change over the last few weeks.
“By law, anyone who sells into the export market must report their sales immediately. … There is a published report that comes out weekly. (The Feb. 10) reports shows long-grain milled rice is up 17 percent — still looking fairly decent.”
Meanwhile, long-grain rough rice is down 8 percent, something Brothers said “is a bit of surprise when thinking about the poor milling yields. It takes more rough rice to create the same amount of fancy, or head, rice. And the fancy demand generally drives the market. … I think the rough rice market will come back and be virtually unchanged from a year ago.
“Again, this is from the Feb. 10 report. But go back to the report from Nov. 11, and milled rice was up 72 percent, rough rice was 29 percent and, overall, we were up 46 percent.
“We fell off a cliff in additional reported sales since November. This is feeding into why the basis has widened — you can’t pay more for rice than you can turn around and sell it for. And it’s obvious we’re having a hard time selling rice at these higher prices.”
How big a drop in new crop acres is needed for Brothers to change his opinion on old crop rice?
Because of the quality issues, “I think we could still be under pressure … right up until we get the new crop price. People in the industry are already saying that they don’t want any old crop rice delivered…
“The quality isn’t there. The milling yields are poor. … The stink bug damage in this crop was horrendous. Most of the stink bug damage is running somewhere between 2 and 14 percent…
“So, I think it’s very unlikely the old crop will get a lot of benefit from new crop prices.”