Future market uncertain for rice producers as possible recession looms

“Right off the bat, I want to say: Don’t kill the messenger.”

Those were the words of Progressive Futures market analyst Dennis DeLaughter as he started his presentation at the annual Missouri Rice Council meeting Thursday night.

“For those of you who don’t know about me, I am risk-averse when it comes to investing,” DeLaughter explained. “I don’t like taking risk if it isn’t necessary. I like to follow market psychology and see what concerns are driving our farmers. So far, currently, I am hearing concerns about survival, financing, the market, prices, and government support.”

DeLaughter continued to explain that multiple things have happened within the past month to make the future of the rice market more dim. He explained there is a very real possibility the nation could soon be experiencing a recession as the Federal Reserve has indicated concern about rising unemployment along with a projected drop in gross domestic product (GDP).

“You may have heard some talk about whether or not we will have a hard landing, a soft landing, or no landing,” DeLaughter said. “A hard landing would be deflation and no landing is if the rates go up but employment stays strong. A soft landing would be where the economic growth slows and the inflation eases slowly enough to not cause a recession. Right now, we can’t say what the landing will be, but things are pretty shaky.”

DeLaughter went on to explain that Missouri has increased rice production over the past few years, with 2024 being a very good year. Last year’s market price for rice was $800 per metric ton. Currently, the price is $675 per metric ton.

“India is a major problem for us this year,” DeLaughter noted. “I said, last year, that when their rice ban was lifted we could be in trouble. And I think we may have gotten a little spoiled by the good numbers we received last year.”

In 2023, India imposed restrictions on rice exports, which included a ban on non-basmati white rice and a 20% duty on parboiled rice, aiming to stabilize domestic supply and prices. Those restrictions, which also included a ban on broken rice exports, disrupted global rice markets and led to higher prices. However, that ban is no longer in place.

“Our current market outlook is a slower demand with a large supply,” DeLaughter noted. “We expect the planted acres to decrease. The cure for low prices is a low supply.”

DeLaughter went on to explain that managed funds, typically hedge funds and other large institutional investors, are showing a historic short position.

Marcela Garcia, president and CEO of the US Rice Producers Association later explained the importance of maintaining good international relations for the purpose of trade due to the fact that 50% of US rice is exported.

According to figures presented at the meeting, more than 50,000 acres of rice were farmed in Missouri in 2024 — an increase from previous years — and through the past 10 years, the overall average rice acreage in Missouri has been stable, but with increasing yields.