Although the cash market remains in the doldrums, that may soon change with the notable export activity that finally materialized. It was reported that Iraq recently purchased 40,000 MT of U.S. rice, or one vessel. Considering the shipping date is imminent, it will most likely aid old crop prices, and have little effect on new crop. For now, long grain paddy prices range from $16-17 per cwt depending on the location.  Southern medium grain, when available, is trading between $19.50-20.50 per cwt.

The first fields of rice have been cut in Texas and south Louisiana as some farmers have struggled with water issues over the past two months due to the strong drought and intense heat. There are reports of some fields being abandoned in Texas as farmers have not been able to keep water on the crop in some areas due to the intense evaporation and individual well situations. Where water isn’t an issue, high field yields are expected.

There is plenty of border and internal Mercosur trade taking place, as per the usual. However, the powerful rice exporting region has also made strong headway in other markets as well. For example, roughly 135,000 MT (paddy equivalent) has traded to Mexico from Brazil. Other notable destinations for Brazil that overlap with US rice are Peru at 68,000 MT, Costa Rica at 40,800, and Venezuela at 130,000 (all paddy basis). Furthermore, these are just the sales reported since January. While some of this business was actually paddy exports other portions were milled rice sales; when U.S. 5% long grain is being quoted at $710 FOB compared to Brazil where quotes were recently $575, it’s not difficult to understand how the US rice market is being undermined by South America. Brazil’s prices are the highest export prices in Mercosur, but that’s also because of the logistics required to bring the rice to ocean ports. 

Based on the most recent USDA export sales report, it appears that U.S. long grain rice is struggling to maintain its footing in the Mexico market. Export demand to this destination is down 22% YTD or 174,000 MT. Fortunately for the industry, some of this market loss has been offset by improved demand in Colombia and Guatemala. Overall, paddy export demand is sluggish against last year, but milled rice demand is up 25% YTD on increased shipments to Haiti and Colombia.

In Thailand, the ongoing harvest has alleviated some pressure in the market, allowing export prices to soften. In addition to fresh supplies, export demand has benefitted from a weakening Baht, down 11% since January. Iraq, the largest benefactor of these fundamentals has now purchased upwards of 600,000 MT since December from this origin. India remains the cheapest option for long grain rice in the world market, despite a lagging monsoon season. Some traders speculate that exports may see a slight downturn if the monsoon conditions don’t drastically improve in the last half of the rainy season. 

The futures market was up against last week as every contract climbed at least $0.60 per cwt. Since Monday, the trading volumes have shot upward, and open interest is also climbing. This leads some to believe that the recent rally may find support and even continue. 

House Passes First FY 2023 Minibus Appropriations Package

This week, the House approved a six-bill minibus appropriations package on a 220 to 207 vote. The package includes the FY 2023 Transportation and Housing and Urban Development, and Related Agencies; Agriculture, Rural Development, Food and Drug Administration, and Related Agencies; Energy and Water Development, and Related Agencies; Financial Services and General Government; Interior, Environment, and Related Agencies; and Military Construction, Veterans Affairs, and Related Agencies funding bills.

Several amendments were adopted on the floor. A division-by-division summary can be found here. The text of the Rules Committee Print can be found here. A list of adopted amendments can be found here. The Rule for H.R. 8294, with a list of all amendments and a description provided by the sponsor, can be found here. 

The Senate is expected to release their FY 2023 appropriations bills sometime next week.

House Holds Hearing on H2-A and H-2B

This week, the House Committee on Education and Labor Subcommittee on Workforce Protections convened a hearing to review and assess the impact H2 Visa Programs (H-2A and H-2B) have on workers.

Members and witnesses raised concerns about H-2A employers are discriminating against American farm workers and the lack of protection from extortion and workforce abuse endured by workers. Members highlighted the need for the same labor protections afforded to workers in other industries.

Members also criticized the Biden Administration’s immigration policy and handling of the southern border and said that Congress cannot meaningfully discuss reforming the H2 Programs until the border is secure and under control. Witnesses noted that employers participating in the H2 Programs who comply with the many regulations, and are subject to oversight from DOL, are frustrated that other employers are hiring undocumented workers with virtually no governmental involvement. It was also stated that from the worker perspective, workers participating in the programs to legally enter the U.S. are being deterred from doing so due to the high number of migrants crossing the border illegally that still receive similar jobs to those received by H2 participants.

Witnesses encouraged Congress to pass the Farm Workforce Modernization Act which they stated would give opportunities for farm workers to work in the U.S. with a path to permanent residency. Additionally, witnesses advocated for the passage of the Fairness for Farm Workers Act which they said would protect farm workers and afford them the same rights as workers in other industries. 

ITC Rejects Fertilizer Tariff

This week, the U.S. International Trade Commission voted to reject antidumping and countervailing duties on imports of fertilizer from Trinidad and Tobago and Russia. The vote may help ease price increases and shortages in the U.S.

USRPA staff members Mollie Buckler and Grace Wang attended the U.S. Agricultural Export Development Council (USAEDC) Seminar in Washington last week, the organization's first in-person event since the pandemic began. The meeting included one-on-one consultations with ATOs from Morocco, Guatemala, Panama, Colombia, and the Caribbean, focusing on key trade issues and market development activities that are currently underway for the promotion of U.S. rice.  

The second day began with a general session, including remarks from Foreign Agricultural Service Administrator Daniel Whitley, whose presentation included a shoutout to USRPA as he discussed cooperator engagement. USRPA works closely with USDA/FAS offices both domestically and abroad, and maintains open communication to make sure farmers interests and priorities are appropriately addressed. The seminar concluded with breakout sessions that focused on the ever changing landscape of the global commodity trading.

No one is more aware of the grain quality debate going on within the U.S. rice industry than Nutrien Ag’s Dyna-Gro rice breeding program. That was evident during yesterday’s field day at their rice research station located south of El Campo, Texas. Field day participants were given a history of the breeding program. While there are over 3,000 yield plots at the station, there are 4,000+ plots stretching from South Louisiana all the way to Tanner Seed Farms in Missouri. Ongoing activity in Puerto Rico, Nutrien’s molecular lab in Canada, key university researchers and rice farmers themselves, the ongoing program operates 12 months a year in continuous breeding projects. 

While the DG263L conventional variety released last year was a major step forward, it is part of a building block for the future. DGL2065 is being developed as a competitor for Presidio and Cheniere due to its high field yield and excellent ratoon characteristics along with an intermediate amylose and gel temperature. Milling is equal to or better than CL153 in tests. Dyna-Gro is currently evaluating 20 conventional hybrids with consistent yields, grain quality and improved agronomic traits. 

“These are very encouraging developments and creates positive news for rice buyers, in particular in the foreign marketplace that is vital to our farmers," Dwight Roberts, advisor to the USRPA who attended the event. "I am confident that the US rice is in the process of restoring its reputation for quality while raising profits for farmers.”

Learn more at www.nutrien.com.