Traverse City Record-Eagle

Archive: Saturday

January 12, 2013

Futures File: Rice poised to rebound?

Corn, wheat and soybeans are the headline-grabbing grains for most U.S. commodities traders, who largely ignore rice.

This is primarily because the United States is a minor rice producer and consumer, making that market less relevant to U.S. farmers and consumers. Nonetheless, the sleepy U.S. rice market can experience wild swings if global production and consumption patterns change.

Prices have been relatively stable, near 15 cents per pound for the last year. But some analysts believe that heavy Chinese buying could cause the U.S. market to come to life. Approximately 40 percent of the U.S. rice crop is exported to foreign countries, primarily to Mexico and Turkey. U.S. rice farmers are currently unable to sell to the growing Chinese market, although there are changes under way that indicate the world's largest rice consumer could soon open its doors to U.S. exports.

As of midday Friday, rough rice for March delivery, traded in Chicago, was worth 15.22 cents per pound. That's down nearly 40 percent from the all-time high of 24.68 cents in 2008.

USDA report rallies corn

A USDA report released at 11 a.m. CST Friday showed increasing demand for corn and led to projections that the U.S. will run dangerously low on corn before this fall's crop is harvested. Prices rallied as much as 24 cents (+3.4 percent) on Friday, with corn for March delivery trading for $7.20 per bushel at noon.

Japanese yen falls, Euro rises

After much anticipation, the Japanese government announced a new stimulus package Friday. The stimulus package will amount to 10.3 trillion yen (over $110 billion) in new government spending aimed at stopping deflation and reviving the struggling Japanese economy. The stimulus package effort was led by the newly elected Japanese Prime Minister Shinzo Abe, who has vowed to renew Japanese economic competitiveness by weakening the Japanese yen so that Japanese goods can become cheaper in the world market.

It is widely believed that the new stimulus package will be paid for by new yen printed by the Bank of Japan, and will therefore lead to higher inflation in the island nation.

During the week, the yen fell to 1.12 cents (-1.5 percent), the lowest price in 2½ years.

Unlike the yen, which has been in a sharp down trend, the Euro exploded upward this week following reports that the European Central Bank would not lower interest rates as expected. One Euro was worth 1.3333 U.S. dollars late Friday morning.

Opinions are solely the writer's. Walt Breitinger is a commodity futures broker in Valparaiso, Ind. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.

1
Text Only