Chicago, Sep. 19 - U.S. farmers are keeping a tight hold on their freshly harvested rice crop, waiting for prices to recover after an unapproved biotech variety was found in regular supplies, trade sources said.
Prices have begun moving up, but they remain lower than they were before government officials said Aug. 18 that an unapproved genetically modified long grain rice had been detected in storage bins in several southern states.
"The GMO thing has turned everyone into a tailspin because farmers were hoping that the price was on the increase," said John Alter, president of the Arkansas Rice Growers Association, a group of rice farmers.
"I think more people are planning to hold a little longer" to their crop, said Alter, a fifth-generation farmer from De Witt, Arkansas.
Farmers are waiting for prices to reach at least $10 per hundredweight, a level they saw just a month ago.
U.S. rice prices sank about $1.40 last month after the GMO news hit the markets. They have recovered some since then with Chicago Board of Trade rice for November delivery rising about 90 cents since its August low. CBOT November rice closed at $9.66 on Tuesday, up 15 cents from the day before.
The industry remains on edge. The GMO rice discovery sparked Japan to stop importing U.S. long grain rice. The European Union, a big U.S. rice buyer, decided to test every shipment from the United States for the unapproved GMO strain, LL Rice 601.
"They like to see rice prices coming back like they have in the last several days," said Thomas Wynn, marketing director for the U.S. Rice Producers, a national farm group.
Farmers were hoping for higher prices to help pay soaring costs, especially for diesel fuel to run irrigation pumps.
This year's crop is yielding better than most in the industry had expected despite a hot summer.
With more than half of the crop off the field in the top rice state of Arkansas yields appear to be above a year ago, crop specialists said.
"Last year the state average was about 149 (bushels/acre). The record was set two years ago at 155 and I think we're going to fall somewhere in between -- 152 something like that," said Chuck Wilson, state agronomist with the University of Arkansas.
The U.S. Agriculture Department is forecasting that U.S. farmers will harvest 193 million cwt of rice this fall, a 13 percent drop from 2005 due fewer plantings.
SEGREGATING NEWLY HARVESTED RICE
Farmers with storage are being advised by some grower groups to segregate the harvest by variety to prevent contamination of the new supply with the unapproved LL Rice 601 strain.
Since only one rice variety, 2003 Cheniere, planted this spring has tested positive for the unapproved GMO Liberty Link trait, it should make it easier for farmers to separate.
"When the smoke clears and the dust settles I think there will be a good measure of this 2006 crop that will certify not having the LL601," Alter said.