Global Rice Market – Asia
The Asian markets impacting our rice market
At Firstgrain we give a narrative of the market each week. In addition we watch various markets and their trends. You could say that all the global influences we watch key off of the vantage point of the regional rough rice markets in the Southern US. Unlike many rice services we start and end with the long grain prices in the Southern US, the Gulf Coast, and the Mississippi river Delta. In our hedging recommendations we key off of the CMEGroup rough rice futures.
You can see from the five-year average in the image above that this season is at the long-term five-year average (the brown line). Of the last four marketing years, the price was at or above the long-term average three of the last four seasons. The rising seasonal shows that the cost of carry elevates the market price as the supplies get sold out. What is also evident is the growing volatility towards the end of the marketing year. The longer you wait to price your rice, the greater the uncertainty of what you will sell it for.
There is a strong price seasonality to Asian rice origins during the November-December period. Prices tend to rise after this time frame. But in the southern part of the Western Hemisphere, prices tend to average sideways to lower into the spring period. This makes sense because the main crop in South America comes off in February and March.
The seasonal on the right measures each market relative to the Thai 5% rice price, like India, Thailand is a major rice exporter and has been so for centuries; and sets the tone for prices in Asia. Interestingly, the price in India tends to move in a downward direction to the Thai price into the Feb to April time frame. These relationships of seasonal spreads would become more interesting if the CMEGroup manages to get its Thai 5% futures contract to trade.