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Rice Continues to Drop on Fear of Rising Stockpiles

July 8, 2013 at 18:28 by Andriy Moraru

Surprisingly, the price of rice continued its steep bearish rally today. It seems like the traders cannot stop fearing of the forecasts outlined by the USDA in their latest (June 12) report on World Agricultural Supply and Demand Estimates.

Although the report itself is almost a month old, the downward price spiralling, caused by the rising projections of both global production and stocks, seems to be reinforced with the similarly bearish expectations for the USDA report update, which is scheduled to be released on July 11. The current estimate for the global rice production level is 479.26 million metric tons in 2013/2014. The ending stocks for the period have been estimated at 107.84 million metric tons. That compares to 465.81 million metric tons production and 104.84 million metric tons end stockpiles recorded in 2011/2012.

Analysts believe that with the current high levels of stocks and overall good situation with the field crops there is really no reason for the prices to go up from this point. The same viewpoint is supported by the United States Department of Agriculture numbers: all rice season-average farm price will be in the $14.50-$15.50 range per 100 pounds in 2013/2014.

September rice futures opened at $15.01 and went down to $14.79 per 100 pounds as of 18:23 GMT on CBoT today. It is the new lowest price since mid-April 2013. The commodity is falling for the fifth consecutive day today.

If you have any questions and comments on the commodities today, use the form below to reply.

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