Note from the ceo

Harvest is picking up speed, and I hope your harvest is going well. Field yield reports I have heard so far point to an average to above-average crop. Milling yield for long grain is currently very similar to last year. As of this writing on September 1, Riceland has graded samples representing 4.3 million bushels of long grain, and the average milling yield is 51/69. The early medium grain samples are doing very well, with the average to date at 58/69.

This month I would like to use this space to discuss rice basis. I know you have been disappointed (as I have) with how wide it has gotten over the last few weeks, so I want to give insight into the other side of the rice price that is not traded on a public exchange.

Like you, I have been excited to see the rise in rough rice prices in Chicago. Finally, prices respond to all the increases in input costs and the historically short crop. But the other side of the ledger is milled rice prices. My joy over higher rough rice prices has turned to frustration with the lack of response in milled rice prices.

I believe there are several factors keeping a lid on milled rice prices. First is the large carryover of old crop stocks. These stocks area margin opportunity for entities that do not have a mandate to sell at the highest price to return a higher rough rice price for the farmer. Second, is the fact that milled rice prices have been low for a long time. Most milled rice buyers do not follow prices in Chicago; they are comparing the current milled rice price being offered to what they paid last year. And finally, as imports continue to take more of the domestic market, milled rice sellers are chasing a smaller market, which leads to major price competition. So, when you hear your cooperative raising the imported rice issue with our delegation inWashington, and you wonder how it impacts you, it contributes to widening your basis.

Basis is the tool to keep rough rice prices and milled prices in balance. No one hates this more than I, but just like the math won’t math on input prices versus commodity prices on the farm, the math won’t math on current milled rice prices and Chicago rough rice prices.

This is a perfect time to use the full flexibility of Riceland’s delayed marketing option programs. These programs extend the runway on pricing to allow for clarity to prevail in the marketplace.  

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