The Rice Advocate Volume 7, Issue 32 August 13, 2010 In this issue: - Cuba: Time for the U.S. Congress to Make History - Brazilian Paddy Rice Prices $305-$315/Ton, Spring Planting Soon in Mercosur - Scenes from USRPA Programs in Central America - General Market Update: USDA Shocks the Market After Months of Mixed Signals - Texas Plant Protection Conference ----------------------- Cuba: Time for the U.S. Congress to Make History ----------------------- By now there should not be anyone in the U.S. rice industry who is not aware of the current bill (H.R. 4645) passed by the House Agriculture Committee that will begin to restore the rights of Americans to sell food and travel to Cuba. Since the year 2000, when the USRPA helped to draft the Trade Sanctions Reform and Export Enhancement Act that Congress passed to ease restrictions for doing business with Cuba, the organization has worked tirelessly to build relationships and facilitate the marketplace by playing a key role in a broad coalition of support in Washington DC through the work of Cornerstone Government Affairs. H.R.4645 will now go to the Foreign Affairs Committee when Congress returns from the current recess on September 13. CALL MEMBERS OF CONGRESS now while they are home in their districts and encourage those on the committee to pass H.R.4645 as it reads without any amendments. Remember what John Block, President Reagan’s Agriculture Secretary said? He said, “I have a passion for trade, for agriculture in all countries, and I have felt for years it is truly ridiculous that we don’t have an open relationship with Cuba.” For bill information, talking points and a list of rice state members of the Foreign Affairs Committee that we have run in previous weeks, visit: http://www.usriceproducers.com/files/247_2010.08.13_CubaTalkingPointsANDCongressionalContacts.pdf. Tell Congress to make history!! Foreign Affairs Committee Roster Howard L. Berman Chairman, D-CA, 28th District Gary L. Ackerman Vice Chair,D-NY, 5th District Eni F.H. Faleomavaega , D-American Samoa Donald M. Payne, D-NJ, 10th District Brad Sherman, D-CA, 27th District Eliot L. Engel, D-NY, 17th District Bill Delahunt D-MA, 10th District Gregory W. Meeks D-NY, 6th District Diane E. Watson D-CA, 33rd District Russ Carnahan D-MO, 3rd District Albio Sires D-NJ, 13th District Gerald E. Connolly D-VA, 11th District Michael E. McMahon D-NY, 13th District Theodore E. Deutch D-FL, 19th District John S. Tanner D-TN, 8th District Gene Green D-TX, 29th District Lynn Woolsey D-CA, 6th District Sheila Jackson Lee D-TX, 18th District Barbara Lee D-CA, 9th District Shelley Berkley D-NV, 1st District Joseph Crowley D-NY, 7th District Mike Ross D-AR, 4th District Brad Miller D-NC, 13th District David Scott D-GA, 13th District Jim Costa D-CA, 20th District Keith Ellison D-MN, 5th District Gabrielle Giffords D-AZ, 8th District Ron Klein D-FL, 22nd District Ileana Ros-Lehtinen RANKING MEMBER, R-FL, 18th District Christopher H. Smith R-NJ, 4th District Dan Burton R-IN, 5th District Elton Gallegly R-CA, 24th District Dana Rohrabacher R-CA, 46th District Donald A. Manzullo R-IL, 16th District Edward R. Royce R-CA, 40th District Ron Paul R-TX, 14th District Jeff Flake R-AZ, 6th District Mike Pence R-IN, 6th District Joe Wilson R-SC, 2nd District John Boozman R-AR, 3rd District J. Gresham Barrett R-SC, 3rd District Connie Mack R-FL, 14th District Jeff Fortenberry R-NE, 1st District Michael T. McCaul R-TX, 10th District Ted Poe R-TX, 2nd District Bob Inglis R-SC, 4th District Gus Bilirakis R-FL, 9th District ----------------------- Brazilian Paddy Rice Prices $305-$315/Ton, Spring Planting Soon in Mercosur ----------------------- As spring time approaches in the Southern Cone of South America, rice farmers from throughout Argentina, Brazil, Paraguay and Uruguay are preparing land in advance of spring planting that will begin in a few days. Due to an increase in rainfall and levels of water in reservoirs, acreage is expected to increase in areas of all four countries that together produce a third of the rice in the Western Hemisphere. Hernan Zorrilla, vice-president of the Uruguayan Rice Producers Association estimated Uruguay’s acreage for 2010/2011 at 470,000 acres, 10% above the last two years while mentioning “the intention of farmers is plant as much as they can and water will not be a limitation this year as has been the case during the last two seasons.” A similar situation to southern Brazil, Paraguay and the key growing regions of Entre Rios and Corrientes in Argentina. Paddy prices in the Mercosur countries range from $275/ton in Paraguay up to $315/ton in Brazil. These prices are considered “normal” for this time of the year. Of particular note is that Brazilian rice exports have exceeded expectations. Brazil imports from March through July of 2010 total 405,341, a 60,000 ton increase over the same period for 2009. (Through July of 2010 the U.S. has exported 22,714 tons of rice paddy basis.) Total imports from March 2009 to February 2010 totaled 907,998 tons. As part of its priority focus on the Latin American market, the US Rice Producers Association has maintain a strong working relationship with the Mercosur rice industries. In 2003 a team from the USRPA conducted a rice trade seminar in Sao Paulo on behalf of Brazil’s national rice industry in coordination with the ATO office of the USDA-FAS. (During 2003 Brazil imported 486,452 tons of U.S. rice, the highest total in recent history.) The USRPA has continued to send teams to both the southern region of Brazil and the Mato Grosso area, one of the most important upland rice production areas in the world. The USRPA also participates in annual events with Uruguay, Argentina and Paraguay to keep abreast of developments. In 2008 the USRPA hosted their annual Rice Americas Congress in Porte Alegre, Brazil that was attended by 37 different countries with a large participation from Brazil’s rice milling, farming and trading businesses. Picture Captions: 1. Left to right are Greg Yielding (Arkansas Rice Growers Assn), Renato Franzner (Urbano Rice Company, Jaragua do Sul, Brazil), John Alter (Arkansas Rice Research & Promotion Board & USRPA board), Luiz Yurgel (Josapar Rice Company, Porto Alegre, Brazil) and Kenneth Graves (Arkansas Rice Growers Assn & USRPA board) at the Arkansas Rice Field Day this week 2. Alberto Livore, a rice research specialist from Entre Rios, Argentina discusses rice research projects in the Arkansas Delta with a 23 member delegation from Argentina that toured the U.S. rice industry during the past two weeks. The group visited Texas, Louisiana, Arkansas and Mississippi. 3. Jorge Alberto Vara (left), a rice farmer and the Minister of Agriculture for the Corrientes Province in Argentina visits with Tiago Barata of Agrotendencias (Rio Grande do Sul, Brazil) during a meeting in Corrientes. Tiago, a rice analyst who specializes in the Mercosur market is a member of the USRPA Market Advisory Team. Graph Pictured curtosy of http://Agrotendencias.com.br Graph: Distribution of Brazilian Rice Imports by Country of Origin (in tons, paddy basis) ----------------------- Scenes from USRPA Programs in Central America ----------------------- Picture Captions: 1. Members of ANAMH, the rice milling association of Honduras, met with US representatives to discuss the US School Nutrition Program in Honduras.  ANAMH members are important customers/importers of US rice.  From left:  Marsha Fair with the US School Nutrition Program, Sady an Donie, ANAMH; Kamal Dieck, ANAMH; Ana Gomez, ANAMH; Michael Hawit, ANAMH; Kris O'Brien with the US School Nutrition Program, Elsa de Moreira, ANAMH and Frida de Bendana, ANAMH. The promotions in the schools of Honduras began August 1. 2. The USRPA is appreciative of the continued cooperation from ARROZGUA in their support of the USA School Nutrition Program, now in its 6th year.  While US funding for the program was  allocated in June, ARROZGUA started the program a few months earlier with its own resources.  Pictured here is Luis Mazariegos, Managing Director of ARROZGUA, Board Member Mario Solorzano, Marsha Fair with the US School Nutrition Program, ARROZGUA President Alvaro Padilla, Kris O'Brien with the US School Nutrition Program and ARROZGUA Board Member Sergio Garcia. 3. The School Nutrition Programs for Central America are now all in operation for the 2010 year.  The programs in El Salvador and Nicaragua began the first of July and are cooperative programs with US rice, US dry beans and US soy.  The programs in Guatemala and Honduras are solely a USRPA program.  In Guatemala the program began in June with US funding and Honduras began the first of August.  The purpose of the program is to include the use of rice (beans and soy) in the schools and in the homes of these important US rice importing countries.  Mothers who cook in the schools are trained on how to prepare meals that are "more nutritious for less cost", using these key US ingredients.  ----------------------- General Market Update: USDA Shocks the Market After Months of Mixed Signals ----------------------- On Thursday, USDA released its usual supply/demand update (WASDE) and shocked the market by heading in the correct direction after months of sending misleading signals to the rice market. Most of us expected more of the same – big acreage, big production, huge carryovers for both the crop year just ended, and the new one which started August 1. Instead, due to an anomaly in the Census export reporting schedule, the analysts had access to the “real” exports for June (normally they are two months behind) and confirmed that 2009/2010 exports totaled 10% larger than they had been predicting. We had been saying this for months, that instead of being light in the last quarter, the pace of shipments was strong, as evidenced by the Weekly Export Sales report. In the better late than never category, the Department recognized this fact and raised their export projection for 2009/2010. They also lowered their import number, and this reduced the carryover from old crop, and of course, the beginning stocks for the 2010/2011 marketing year. Add to this a reduction in their yield estimate for the new crop, and higher domestic and export use for the new crop year, and suddenly their forecast of ending stocks drops by 10.6 million cwts to 56.8 million cwts. That’s the good news. The bad news is that the forecast puts the carryover on August 1, 2011 22.9 million cwts higher than the revised number for the past marketing year, and the biggest since 1985/1986. That makes for an extra one million tons of rough rice or about 600,000 tons of milled rice that need to be sold – logically into the export market. That is likely why the bid for rice in the Delta dropped to $8.75 delivered to barge loading facilities this week. There is still a perceived excess of rice. Conclusion: A lot of new sales need to be made to allow the price to rise. But the good news here is that US long grain rice is arguably now the cheapest high-quality rice in the world – a situation those of us who have been in the trade for many years cannot recall ever being the case. Where it will be sold remains a mystery, but there are many working on it as write this. Export sales reported this week were complex, as there were 2 days left in the old crop year, and 5 days to begin the new. Carryover sales between marketing years totaled 280,800 metric tons (on the low side of normal). New sales made last week were 137,800 tons, which included the usual business to Canada and Ghana, as well as big sales to Haiti, Mexico, and Jordan. Actual exports for the week tallied in at 67,200 tons – a good week. Loadings for Venezuela, Haiti, and Saudi Arabia were reported. If we go by the Weekly Export Sales, shipments from August 1, 2009 to July 30, 2010 were 3,681,400 metric tons, compared to the previous year of 3,322,900 tons. This 10% increase proves that the stories we heard all year about “no business” were not accurate. The strong start to the new marketing year – almost 500,000 tons on the books -- caused USDA to raise its export forecast in Thursday’s WASDE. World Market Price was unchanged this week, and likely to go higher in coming weeks with higher levels being reported in the Asian markets. Stories out of Saigon reported that 600,000 tons of Vietnamese rice had been sold to China, and then the stories of Chinese buyers in Bangkok surfaced. We do not know the truth, and reports of a total of 1.0-1.5 million tons of Chinese buying probably fall into the “wishful thinking” category. But rule #1 in the rice business is “where there is smoke, there is fire” also applies, and the markets are extremely jumpy and reacted to these rumors with higher price quotes and a renewed faith that buyers would come out of the woodwork. Benchmark Thai 100% Grade B was offered at $455-$460 by weeks end, up $10 or more for the week. In Vietnam, new minimum export prices go into effect on Monday, and they are $400 for 5% and 370 for 25%. Prices in Vietnam today were at or above those minimums, with good buying interest and heavy vessel loading. What has the market stirred up – some say awakened from its slumber – is the backwash from the wheat market. Well-publicized production shortfalls in the Former Soviet Union have reduced world wheat supplies from “massive surplus” to “fully adequate to meet demand”. When the Russians finally banned the export of all grains (effective Sunday), and sellers began cancelling low-priced contracts for wheat, the market reacted. Add on to this the floods in China and Pakistan, a late crop in Thailand, and harvesting problems in Indonesia, and just as suddenly the rice market is drawing attention and buyers who were on the sidelines or purchasing hand-to-mouth are considering getting in the game now. This change in market psychology is still being dismissed by many in the trade, but we suspect they were planning on ever-lower prices, not higher prices. Since no two years in the rice business are ever the same, no one is predicting a repeat of 2007/2008. However, the odds favor higher prices for rice all around the world six months from now, and even in the US. A lot depends on moving our rice to markets that are traditionally not buyers of our rice, and there is no guarantee that this can be done. But the outlook is definitely more sunny today than it was just one month ago, as demand is likely to increase. In the cash market, harvesting is proceeding, and except for some small distressed trades due to space issues, rice is not selling. Bids in Louisiana are $15.00 per barrel, in Texas a weak $3.00 over loan, and $8.75-$9.00 delivered mill or barge in the Delta. Farmer selling goals are pegged at $1.00 per cwt higher. In Chicago, rice futures ended the week up 39 cents in the nearby September. Down days were recorded Monday and Wednesday, and action yesterday and today was strong despite apparent attempts to sell the market lower. We see support at $10.50 and resistance at $11.35, and that upper ceiling could well be tested next week. Volume was very good, averaging 1,810 contracts over the past five days, with open interest up over 300 contracts and above 18,000 total. ----------------------- Texas Plant Protection Conference ----------------------- The Texas Plant Protection Conference will be held in College Station, TX, December 6 and 7, 2010. The Soybeans/Rice Session will be held from 11am-noon on Tuesday December 7. This is a good opportunity for farmers, crop consultants, agrichemical representatives and university/USDA scientists to share information about recent pest management advances in a number of important commodities. If you want more info, please contact Bob Sasser (tppa@consolidated.net) or Dr. Mo Way (moway@aesrg.tamu.edu). ----------------------- Side Note: RiceFax 08/12: Midsouth Harvest Grains Momentum ----------------------- Overview: - Midsouth rice harvest is gaining momentum. No yield reports yet. - South Louisiana and Texas harvest has reached the halfway point in some areas. Yields are somewhat better now that growers are moving into rice that wasn't blasted by intense heat during flowering. But averages remain mostly lower than anybody wants to see. - Rice stink bugs are building again on some later planted rice in the Midsouth. Arkansas issued an advisory Wednesday about this ongoing infestation. - A tropical depression in the Gulf of Mexico has somewhat fizzled but could still produce rain later this week in parts of our coverage area. For full report visit: http://agfax.com/ricefax/reports/10/reports/0812.htm ----------------------- Side Note: RiceTec Hybrid Reports Released ----------------------- The latest audio and PDF versions of the RiceTec Hybrid Rice Report have been posted at www.ricetec.com.  You can download the audio version in mp3 format and transfer to your iPod or smartphone and carry with you, or print the crop report in PDF format. Included in this week’s report: Harvest progressing in TX and LA Rice draining underway in Midsouth along with a little harvesting Rice stinkbugs and fall armyworms still around, but worst behind us RiceTec Arkansas Field Day scheduled for August 12.  (Click Here to Preregister) If you, or someone you know, would like to receive this report, please send an note with the email address to Brian Ottis at bottis@RICETEC.COM to be added to the list. ----------------------- Crop Reports & State Newsletters ----------------------- Texas A&M AgriLIFE Research Center: The latest Texas Rice Crop Survey reports are available through the Beaumont Center web-site at: http://beaumont.tamu.edu/CropSurvey/CropSurveyReport.aspx University of Arkansas Division of Agriculture, Cooperative Extension Service: Arkansas Rice (08/11) at: http://usriceproducers.com/stateassociations/50-arkansas LSU Ag Center: Rice Research Station News, 08/01 (Vol. 7, Issue 3) at: http://usriceproducers.com/files/261_2010.08.01_LSU_RiceResearchStationNews.pdf RiceFax: Midsouth/Texas; 08/04 Midsouth Harvest Gains Momentum (Full Report) at: http://agfax.com/ricefax/reports/10/reports/0812.htm ----------------------- Upcoming Events ----------------------- August 18, 2010 Cache River Valley Seed Company Field Day, Cash, AR August 26, 2010 Missouri Rice Council Field Day, Glennoville, MO September 2, 2010 University of Missouri Delta Center Field Day, Portageville MO September 17, 2010 Delta Rice Luncheon, Cleveland, MS September 21 - 24,2010 Rice Challenges in the 21st Century, Cali, Colombia September 28, 2010 Mini Field Day, Texas A&M Rice Research Center, Beaumont, TX September 29, 2010 41st Annual Texas Rice Festival, Winnie, TX October 12 - 14, 2010 TRT World Rice Conference, Phuket, Thailand February 1 - 2, 2011 14th Annual NCSCRC “Tillage Conf.”; Baton Rouge, LA For more information visit USRPA’s online calendar at: www.usriceproducers.com/calendar ----------------------- USDA Reports Next Week ----------------------- Crop Progress (NASS) Monday, August 16, 4:00 pm Weather Crop-Summary (NASS) Tuesday, August 17, 12:00 pm U.S. Export Sales (FAS) Thursday, August 19, 8:30 am Farm Labor (NASS) Thursday, August 19, 3:00 pm All USDA reports are available by visiting http://www.usda.gov/wps/portal/?navid=AGENCY_REPORTS=RT. The US Rice Producers Association 2825 Wilcrest Dr., Ste. 505 Houston, TX 77042 P. (713) 974-7423 F. (713) 974-7696 E. rice_advocate@usriceproducers.com