Rice Slips Below $14 After Halving YTD Gain in a Week

By Andrew Moran June 23, 2020, 6:22 pm • Posted in Commodities

Rice futures slipped below the crucial $14 mark on Tuesday as the commodity continues to trend downward after touching a 12-year high. Rice prices had topped $22 due to tighter inventories and weather patterns affecting output capacity in major producing markets. Is rice set to test $12 in the coming months, or does the rally still have momentum?

July rice futures dipped $0.03, or 0.21%, to $13.97 per hundredweight at 17:06 GMT on Tuesday on the Chicago Board of Trade (CBoT). Rice prices have plummeted more than 11% in the last week, one week after crashing 22%. This was their biggest weekly loss in nearly 30 years. But the commodity is still up nearly 6% year-to-date.

Earlier this month, the most-active rice futures contract – July – had settled at $22.065, the highest finish since April 2008. Since then, it has nearly cut its year-to-date gains in half in a little more than a week. There has been immense volatility in rice futures, causing prices to suffer their worst weekly performance since March 1994.

In recent years, the industry has experienced tighter inventories as heavy rains have prevented or delayed planting of the 2019-2020 crop through the key US Delta region. Over the last few months, there has been greater demand with more pressure being placed on food markets. The main problem is that the market suffered from illiquid levels unseen in more than a decade.

Rice prices may be coming back down to earth with the coronavirus pandemic subsiding and the economy reopening. Plus, according to the US Department of Agriculture (USDA), US producers are likely to enjoy a large crop in the 2020-2021 marketing season, which would boost domestic supplies.

The USDA also projected that total acres planted in the US would increase from 2.54 million acres last year to 2.85 million acres this year. It estimates that the 2020-2021 rice crop will climb 17% to 216.2 million hundredweight.

In global rice markets, the International Grains Council thinks global demand will reach 500 million metric tons, while output will come in at 506 million metric tons.

In other agricultural commodities, July corn futures slumped $0.035, or 1.07%, to $3.2475 per pound. July wheat futures picked up $0.01, or 0.2%, to $4.905 a bushel. August soybean futures edged up $0.0125, or 0.14%, to $8.75 per bushel.