The Rice Advocate, Vol. 17, Issue 26

Volume 17, Issue 26

July 2, 2020

In This Issue:

Market Update: Gulf Coast Rice Harvest Gets Early Start
USMCA Enters Into Force
Washington DC Update

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Gulf Coast Rice Harvest Gets Early Start

The 2020/21 rice crop continues to mature, and based on the latest USDA data, rice headed is significantly ahead of last year at this time, and on pace with the 5-year average. Despite a few weather obstacles along the way, the crop condition also looks more favorable than last year. With the US Independence Day holiday shortening the work week, many growers and marketers abstained from the market, leaving prices of both old crop and new crop largely unchanged from last week.

Along the gulf coast of Louisiana a combine or two are in the field harvesting and some Texas fields are being drained. Hot, dry weather is quickly maturing the crop and the outlook for the week ahead is for that trend to continue. The South Louisiana Rail Facility has confirmed several shipments of new crop paddy for late July, August and into September. New crop sales of Texas rice to area mills are allowing farmers to take advantage of the demand while the effects of COVID-19 continue to create some uncertainty in the marketplace.

After a dismal export sales report last week, net sales were buoyed by fresh demand in Mexico, Saudi Arabia and some Central American countries. On the other hand, shipments were down from last week, and down for the 4-week average. US export prices appear to be holding steady; however other origins continued to soften this week. Asian export prices were down across the board, with Thai 100% B and Myanmar 5% leading the way, down $15 per ton and down $20 per ton, respectively against last week.

This week the June acre report was released by the USDA which publishes the results of grower surveys. According to the report, long grain acres are up 23%, or an additional 414,000 acres, year over year. The report indicates that Arkansas, the largest rice growing state will be up 32% from last year. As for medium grain, the Arkansas medium grain planted area is estimated to be down 10% in 2020, and California acres down 1%. Short grain acres in California look to rebound by 12,000 acres from 2019, ultimately leaving total medium and short grain acres up 1% year over year. While these figures are an improvement from the Prospective Planting report, the industry still anticipates more acres than reflected in this report for all types of rice.

The Rice Stocks report was also published this week, which reflected a 27% decline from June 2019. Long grain rough rice stocks in all positions were down 43% from June 2019 and total medium grain stocks were up 19% year over year which is mostly attributed to Southern medium grain. Rice stocks (milled and paddy) on a paddy basis were only down 86,000 cwts from last year in California, surprising most in the industry. In other words, this report affirms the tightness in the market that has been the topic of much conversation throughout the year.

In the futures market, the open interest held relatively steady, while volume fell by 40%. The nearby contract was up almost 10% against last week, and the new crop contracts also posted minimal gains. Compared to previous weeks, the market was on the quieter side, but that should change as we navigate thru July.

Virtual Rice Field Day

Thursday, July 9, 2020

8:00 a.m. - 9:30 a.m.

ONLINE VIA ZOOM

Listen to USRPA Board Chairman and Market Analyst, Dr. Thomas J. Wynn, present the Rice Market Update and Outlook!

Other Speakers and Topics Include:

Dr. Ted Wilson - 2020 Rice Research in Texas

Dr. Joe Outlaw - Farm Policy Update

Bart Fischer - Overview of Generalized System of Preferences

Click to Register!

Presidio rice on the farm of Galen Franz near Victoria, Texas is a popular variety of mills in both Texas and Mexico. A good ratoon variety, this field is expected to be harvested around July 18. Last year’s harvest was sold to a mill in Monterrey, Mexico. Hot, dry weather along the gulf coast is helping mature the crop. A number of Texas farmers are draining fields this week.

Louisiana got the harvest off to an early start on July 1 as Dustin Watkins cuts a field of CL-111 near the town of Welsh. Already sold, this paddy is headed to Mexico later this month.

USMCA Enters Into Force

Wednesday the United States-Mexico-Canada Agreement entered into force, replacing the decades-old NAFTA to govern trade flow in North America.

The three countries negotiated the updated agreement in less than two years, tightening the rules of origin for autos, revamping regional labor standards, and overhauling Canada’s dairy pricing system among other highlights. Notably for the U.S. rice farmer, USMCA maintains duty free access for U.S. rice entering Canadian and Mexican markets.

The deal’s entry-into-force brings renewed attention to Mexico’s two-year lapse in approving U.S. agricultural biotechnology products, in light of USMCA’s biotech coordination and transparency standards. This and other issues demonstrate the renewed deal is not perfect, but U.S. agriculture was close to unanimous in its support for USMCA.

“The U.S. industry has nurtured the rough rice export market to Mexico into the number one export market for U.S. rice of any form,” said Dwight Roberts, President & CEO of USRPA. “The North American market is critical for U.S. rice farmers, and particularly Mexico, where USRPA promotion programs have impacted sales and per capita consumption of rice,” Roberts concluded.

U.S. Secretary of Agriculture Sonny Perdue penned an oped in the North Carolina Fayetteville Observer saying, “We are shown once again that President Trump has the backs of America’s farmers and thank him on the delivery of this much better deal.”

USRPA continues building its longstanding relationships with partners in North America to promote the interests of U.S. rice farmers by promoting U.S. rice in the region.

Washington DC Update

In a rare display of bi-partisan and bi-cameral action, the Paycheck Protection Program (PPP) for small businesses was extended this week for about five weeks, through Aug. 8, under S. 4116. In a largely unexpected move on Tuesday, June 30 ^th, the Senate passed by unanimous consent S.4116, which was rapidly followed by House action the next day, also passing by unanimous consent. The legislation now goes to the President for signature.

Under the CARES Act the application period expired at 11:59 p.m. on June 30 with the expectation that small businesses would be back in operation. Approximately $130 billion in unused PPP funds would have been lost if legislative action had not been taken.

The Paycheck Protection Program offers low-interest loans guaranteed by the Small Business Administration for small businesses and other entities to keep workers on the payroll during the Covid-19 crisis. Its lending authority was set at $349 billion under the CARES Act passed in March, and later increased to $659 billion. The program is open to businesses and 501(c)(3) nonprofits with 500 or fewer employees, self-employed workers, and some companies that are part of food or hotel chains, among others.

PPP loans can be forgiven for borrowers that pay eligible payroll expenses or make other covered payments for mortgage interest, rent, or utility costs incurred over 24 weeks or through Dec. 31, whichever comes first. The Small Business Administration and its lending partners had approved $518.9 billion in PPP loans as of June 27, with $134.5 billion left over, according to SBA data. The pace of lending slowed in recent months as some businesses questioned whether they qualify for the program or its loan forgiveness provisions.

Although there are many other proposals regarding PPP implementation being discussed and considered, S. 4116 did not make any broader changes to the Paycheck Protection Program. As the COVID crisis continues, additional legislative measures to provide assistance to small businesses are expected from both chambers. The House has passed the HEROES Act and Senate Majority Leader Mitch McConnell (R-Ky.) has announced that the Senate would take up another measure in late July ahead of the August recess.

Upcoming Events

July 1, 2020

H. Rouse Caffey Rice Research Station Annual Field Day

Crowley, Louisiana. Tours early in the morning, followed by presentations inside. Check back later for more information.

July 8, 2020

Horizon Ag Louisiana Field Day, 5:00 p m

Richard Farm Shop, 5632 Louisiana Highway 700, Kaplan, Louisiana

For more information, please call Horizon Ag at 866-237-6167.

July 9, 2020 (Virtual)

73rd Texas A&M AgriLife Research Extension Rice Field Day

8:00 - 9:30 a.m. via Zoom

Click Here for Details and to Register

July 9, 2020 (Virtual)

Impacts of the Transportation System on Agricultural Products

2:00 - 3:00 p.m. via Webinar Link

Click Here for Details and to Register

July 23, 2020

University of Arkansas Row Crops Field Day

Rohwer Research Station

140 Experiment Station Loop, Watson, Arkansas – check back later for more information.

August 5, 2020

University of Arkansas Row Crops Field Day

Northeast Research & Extension Center

1241 W. County Road 780, Keiser, Arkansas – check back later for more information.

August 7, 2020

University of Arkansas Rice Field Day

Rice Research & Extension Center, Stuttgart, Arkansas – check back later for more information.

August 20, 2020

Missouri Rice Research and Merchandising Council Field Day

More Information Coming Soon.

USDA Reminds Producers to Complete Crop Acreage Reports

WASHINGTON, D.C., July 1, 2020 – Agricultural producers who have not yet completed their crop acreage reports after spring planting should make an appointment with their local Farm Service Agency (FSA) office before the applicable deadline. July 15 is a major deadline for most crops, but acreage reporting deadlines vary by county and by crop. Contact your FSA county office for acreage reporting deadlines that are specific to your county.