WOW, hard to believe it is planting season! Seems like yesterday we were preparing for the 2016 crop.
The following is a summary of market news from Rusty Bergstrom, manager of Rice Marketing Association. Rusty, also, works for Rice Farmers Coop part-time helping with rice grading and bookkeeping.
As of last week the 2016 inventory for rice is Texas is approximately 1,750,000 cwt of unsold. The total estimated dry rice harvested for Texas on 190,000 acres, first and second crop, is 15,800,00 cwt. That computes to 11% of the 2016 crop left in the producers’ hands. Most mills have purchased large volumes in recent weeks. Gulf Rice purchased approximately 700,000 cwt. over the last few weeks. That is an uncommon amount for them to purchase in a short period. Riviana Foods Inc. (ARI) and Colorado County Rice Mill are in good shape as for as inventory. The overall market is quiet. Riviana and CCRM will offer on high milling good quality rice.
Beaumont Rice Mill and Colorado County Rice Mill have inquired about low milling #2 rice last week. Beaumont Rice was offering $2.50 premium. High milling and good quality rice will always be able to receive a bid over low quality. The low milling rice combined with low quality, #3 or worse, is still struggling to get any type of bid. It is very possible some of the low quality rice will be forfeited to the government. We have not had rice forfeited in thirty plus years. Once again, the low quality rice in our area coupled with the large quantity of poor quality rice in Arkansas and Louisiana is continuing to be a serious problem for the market.
The outlook for the 2017 crop is not good. At this time, acres will be off substantially. In our area, we could see a 20 to 25% drop. Most of those acres will rotate over to cotton, some soybeans, or not farmed. The largest drop will be in Matagorda County. Arkansas rice acres could decline over 500,000 acres. Of course, they increased 600,000 acres last year.
On other market news: Riviana Foods Inc. announced a dry rough rice contract for 2017. The contract was for Presidio, Cheniere, CL 152, and CL153. They offered a $3.00 premium with 100% of the ups through December 31, 2017 and basically two months of storage. They were able to fill the contract quickly and closed it late last week.
Corn Market: Weekly Outlook: 2017 Corn Prospects by Todd Hubbs from farmdocdaily can be obtained at the link below http://farmdocdaily.illinois.edu/2017/02/2017-corn-prospects.html . The farmdocdaily is a publication from the Department of Agriculture and Consumer Economics at the University of Illinois Urbana-Champaign. They send out information several times a month and most are very informative.
Happenings at Rice Farmers Coop.
First, I am proud to announce that Alonzo Balderas has been promoted to Assistant General Manager. Alonzo started with the coop when he was in high school as a part-time counter help in January 2007. He graduated from El Campo High School and attended WCJC receiving an Associate Degree in Computer Programming. Over the years, he duties have included tire and fuel sales, inventory, overseeing our IT system, and our rice data system. His new responsibilities will include our safety program, the operations of both tire service centers and online marketing. He will continue to be responsible for our computer system, assisting the General Manager and Accountant, and some inside sales.
The coop is currently finishing up the annual audit for the past year. The audit should be completed in the next few weeks. The 2016 – 2017 fiscal year will not be a very successful year. The 2016 crop volume was enough to generate a profit, but a problem with the 2015 rice in storage will reduce that profit. The Bay City tire store will suffer a loss but is improving every month. Even though the store suffered a loss, its bottom line will improve approximately 70%. We expect the bottom line for the coop to be breakeven to a slight loss.
The current year, 2017 – 2018 will be a trying year for all. As mentioned earlier, the low commodity prices, continuing oil industry slump, and the sluggish general economy will contribute. We need all aspects of the economy to improve for us to have a successful year. There seems to be a light at the end of the tunnel. The economy is starting to show signs of improvement. The drilling rig count has improved over the last few weeks. Farm commodity prices have been stable to increasing. The next few months will be crucial for the ag commodity markets.
In closing, we have all been through rough times. Farming is actually one of the most optimistic professions that exists. Farmers have a large physical, mental, and monetary investment in their crops. Farming is more than planting seed, caring for the growing plants and if everything goes right harvesting that crop. A farmer has to have faith that the rains come at the right time. He needs the sun to shine for the correct amount of time. Fields have to be scouted for weeds, grasses, insects, and fungi. Some of these are old time pests, but new ones show up without warning. Many of the old pest will become resistant to the chemicals that have historically controlled them. Through all of this, the farmer remains optimistic, knowing that his toils provide food for the people of the world. As the Dodge Ram commercial says “Then God Made a Farmer”. Rice Farmers Coop and Mr. Tire are honored to be part of this great industry.
Thanks for what you do,