20000219CBOT rice closes lower as spreading noted

CHICAGO: Rough rice futures at the Chicago Board of Trade closed lower on Thursday as large rice stocks continued to weigh on prices, traders said.

Outright trade was fairly routine with increased spreading noted as traders begin to exit the March contract before first notice day Feb. 29, they said.

Rice closed 1-1/2 to 2-1/2 cents per cwt lower, with March down 2-1/2 at $5.40.

"The March/May traded at 29 cents (premium May)," a trader said. "It was mostly spec liquidation ahead of first notice day."

Rice futures continue to find underpinning on minimal amounts of farmer selling and on good demand for rice, the traders said.

The US Department of Agriculture Thursday reported net export sales of US rice during the week ended Feb. 10 were 98,900 tonnes, double the previous week and 37 percent above the four-week average.

"Demand isn't the problem. The problem is the huge supply,' a trader said.

That burdensome stocks number continues to hang over the market and was brought to the forefront in the US Agriculture Department's Feb. 11 supply/demand report.

World rice production was forecast at a record 397.4 million tonnes in 1999/00, up about 1 million tonnes from last month's estimate, the USDA said.

Global ending stocks were increased to a record 59.4 million tonnes, up nearly 600,000 tonnes from last month's forecast, the USDA said.

US rice exports were slightly increased to 2.71 million tonnes, up from last month's forecast of 2.59 million tonnes, USDA said.

ADM Investor Services Thursday was a noted stop-loss seller of the March but also was featured covering short positions near the day's lows, traders said.

Scattered commission house and local trading made up the bulk of the day's volume with commercials not playing a key role in Thursday's session, they said.

Rice futures volume was estimated by the CBOT at 1,000 lots, above the 584 lots traded Wednesday.-Reuters