Have You Seen The Surge In US Rough Rice Futures

America’s rice harvest is forecast to fall to its lowest level in 33 years. CBOT rough rice futures, the benchmark for US long-grain rice before milling, are surging higher at the end of summer after rising 69% so far this year.

USDA forecasts total production at 158.2 million hundredweight, roughly 23% below last year’s 206.7 million. Harvested acreage is projected at just 2.057 million acres, the lowest since the 1972/73 season. 

“While beginning stocks are raised 4.6 million cwt to a 40-year high of 58.4 million cwt, production is reduced 0.2 million cwt to 158.2 million, a 33-year low, as a reduced forecast for harvested area more than offsets a higher yield,” USDA wrote in a report.

The good news is that a meaningful supply buffer remains, with the year beginning with 58.4 million hundredweight in inventories, a 40-year high. This will provide a cushion against any lost production.

Even with that buffer, USDA expects ending inventories to shrink to 40.4 million hundredweight, down 31% from a year earlier. Its forecast for the all-rice season-average farm price is $14.90 per hundredweight, about 20% above the previous year.

USDA said there was a “notable shift to a relatively tight U.S. supply situation” from last year’s harvest to this year’s.

That is being reflected in CBOT rough rice futures, which have jumped 69% so far this year to $16 per hundredweight and could be on track to test the $19.65 high reached in the summer of 2023.

CBOT tracks US long-grain rough rice. International prices, especially in Thailand, have also risen.

Goldman analysts estimate this El Niño could push global food commodity prices up more than 15%.

It is not a great sign when the grain that feeds the world is soaring in price in multiple regions, suggesting further food inflation pressure on household budgets.