DIRECTOR TERMS EXPIRE

Five directors have terms that will expire at the annual membership meeting on November 25, 2008. They are: Jerry Brown, Position No. 1; Dan Eldridge, Position No. 2; Gary Sebree, Position No. 3; Ray Vester, Position No. 4; and James E. “Bud” Bingham, Position No. 5.

As required in our bylaws, the nominating committee has met and renominated all directors.

If any active member is interested in seeking a director position, our bylaws state:

“Any active member may then nominate an active member as a candidate for any director position to be filled by mailing a nomination as directed by the Board of Directors, pursuant to the provisions of this Article stating the name of the candidate and the position for which nominated. Such nomination must be seconded by signatures of at least fifteen (15) active members of the Association and must be received at least 60 days prior to the date of the Annual Meeting.”

If you would like to nominate any active member for a director position, please contact the Stuttgart main office for a nomination form. The accounting firm of Erwin & McCorkindale, Stuttgart, must receive nominations for any position by September 26, 2008.

Please remember when you make nominations that a portion of Article 6(a) of our bylaws states:

“Each of said Directors shall be a member or a representative of a member in good standing of the Association and a patron thereof currently marketing 65% or more of the rice owned by the member through the Association. No person engaged in business in competition with the Association shall be eligible to serve as a director, and if a majority of the Board of Directors finds at any time following a hearing that any director is so engaged or affiliated, such person shall thereupon cease to be a director.”

The results of the voting will be announced at the annual membership meeting in November.

IRAQI MARKETING TEAM VISITS

On August 9, a 12-member Iraqi marketing team visited Producers. The delegation included representatives from the deputy prime minister's office, The Grain Board of Iraq, the Ministry of Trade, and the General Company for Grain Trading. The tour, hosted by the USA Rice Federation, was intended to increase Iraqi confidence in the U.S. as a reliable supplier of top-quality rice. Exports of U.S. rice to Iraq this year are 34% lower than last year. USA Rice is working to increase U.S. rice imports to Iraq to the level of two years ago.

HOSKYN REAPPOINTED TO ARKANSAS RICE RESEARCH & PROMOTION BOARD

Jerry Hoskyn, chairman of the Arkansas Rice Research & Promotion Board, has been reappointed by Governor Mike Beebe. Hoskyn has served on the Arkansas Rice Research & Promotion board for nearly eighteen years and also is vice president & vice chairman at Producers Rice Mill, Inc.

DOCUMENTATION REQUIRED FOR 2008 DELIVERIES

Just a reminder – As per the 2008 Sign-Up Policy, we are requiring all sales invoices/summary sheets from seed dealers, lab reports and FS 578 reports be returned to our Stuttgart member records department.

FIRST ADVANCE SET

Your board of directors has authorized a first advance on the 2008 rice crop of 171% of loan for long grain in the regular (eligible) seasonal pool and the world price pool. The advance for medium grain in the regular (eligible) seasonal pool and the world price pool will be 176% of loan. Eligible long grain in the pricing pool will be advanced 136.5% of loan.

As an example, below is the first advance on the following milling yields:

Drying charges will remain the same as last year. If you have questions, please contact your local elevator manager.

RICE LOT COMPLETIONS

All members are reminded timely completion of green rice lots insure prompt first advances. Green rice lots are closed automatically after seven days when there are no deliveries. However, if you change a field, have weather or disease problems, or just want to change lots, be sure to tell the dryer operator when you pull on the dump/scale to close the lot and open a new lot.

HOLD AGREEMENTS

All members who regularly want a portion of their first advance money held until after January 1, 2009, have been mailed a “Hold Agreement.” If you have not signed and returned your form, please do so immediately. It must be signed and returned to our office before you deliver your rice.

If you have questions or would like to have all or a portion of your money held for late payment, please contact the member records department today, 870-673-4444, Ext. 449.

IMPORTANT: All members participating in the pricing pool must return their follow-up sheet before they deliver any rice.

5TH ADVANCE MAILED

Your board of directors approved a fifth advance on 2007 crop rice of 40¢ on long grain and 60¢ on medium grain that was mailed on July 31. The following is a summary of the average fifth advance and the total advances to date:

Depending on milling yield, your advance in the eligible seasonal pools could vary slightly with the overall average. The fifth advance is all cash .

If you have any questions regarding your advance, please talk with your local elevator manager or call the Stuttgart main office, 870-673-4444, extension 449.

SEPTEMBER IS NATIONAL RICE MONTH – Celebrate the goodness of RICE!

Show your pride for U.S-grown rice with National Rice Month premium items. You can order now from the USA Rice Federation by calling (703) 236-1448 or check their website www.usarice.com. The following items are available: t-shirts, golf caps, aprons, posters, magnetic shopping lists, reusable grocery bags, measuring cups, balloons, pencils, pens, rice recipe brochures and rulers.

MANAGER'S MESSAGE

At the beginning of each year, we like to identify developments in the U.S. and around the world that have the potential of significantly impacting rice prices during the upcoming marketing year. As in the past, We have divided our analysis between potentially bullish (positive) and bearish (negative) developments for the market.  

POTENTIAL BULLISH DEVELOPMENTS

(1) Another decline in U.S. rice stocks projected: Despite a 4% increase in U.S. rice production, USDA, for the third consecutive year, is projecting U.S. ending rice stocks during the 2008/09 marketing year will decline from the previous year. U.S. ending stocks are projected to drop from 29.6 million cwts. to only 22.5 million cwts. With a stocks-to-use ratio of only 9.5%, U.S. rice supplies are, once again, expected to be extremely tight during the entire 2008/09 marketing year.

(2) Mid-South field yields (???): Due to excessive rain and flooding, the 2008 rice crop in the Mid-South was planted about a month later than normal. According to extension service research, planting delays typically have an adverse effect on rice field yields. Surprisingly, USDA is currently projecting 2008 field yields in Arkansas will be two bushels per acre higher than in 2007. What impact, if any, the late planting of the 2008 rice crop had on Mid-South field yields will be one of the big questions for the upcoming year. If 2008 field yields are adversely affected, that would make an already tight supply during the 2008/09 marketing year even tighter. 

(3) Record outstanding U.S. export sales carried over into 2008/09: A record 612,300 metric tons of unshipped 2007/08 exports will be carried into the 2008/09 marketing year. This year's carryover is 339,100 metric tons or 124% higher than a year ago. Having to use new crop rice supplies to satisfy record unshipped export sales from the previous year will have the net effect of reducing the quantity of rice available for new crop export sales during the 2008/09 marketing year.  

(4) U.S. rice prices competitive with Asian prices: Except for Vietnam, U.S. export prices are very competitive with Asian rice prices. Typically, U.S. export prices are considered competitive if they are within $50-$60 per metric ton of Thai prices. Now that U.S. prices are almost identical to Thai prices, export demand for U.S. rice should be strong during the 2008/09 marketing year. 

(5) High input cost of growing rice: Due to rising oil and energy prices, the input cost to grow rice has exploded during the past year. This explosion in the cost of growing rice is not only affecting U.S. rice farmers, but also rice farmers around the world. The high input cost should be supportive to world rice prices. If world rice prices do not keep up with rising input cost, rice farmers around the world will likely be forced to cutback on their rice plantings during the upcoming year.

(6) Another acreage battle in 2009: We are anticipating another big acreage battle among the major crops during the 2009 spring planting season. If rice prices do not keep up with alternative crops, less rice will be planted in 2009. The possibility of such a development will be supportive to rice prices during the 2008/09 marketing year.

(7) Extremely tight world rice stocks: Despite a modest 4% projected increase, statistically world rice stocks will, once again, be extremely tight during the 2008/09 marketing year. These projections are based on normal weather conditions around the world. What if an unforeseen weather event, such as a typhoon, hurricane, excessive rain or drought occurs in a major rice producing area around the world? If such an event should happen, world rice prices would, once again, explode.

POTENTIAL BEARISH DEVELOPMENTS

(1) Higher prices stimulate growth in world rice production: One of the objectives of higher prices is to stimulate more production. Both Thailand and Vietnam have reported bumper summer or second crops, while India and Pakistan are also projecting a larger harvest on their current rice crops in the field. Currently, USDA is projecting only a modest increase in world rice production, however, should the higher prices encourage more rice production in Asia, this would be a significant negative development for world rice prices.

(2) Possible resumption of full rice exports by India, Pakistan, Egypt and Vietnam: Since the middle of the 2007/08 marketing year, many of the major rice exporting countries have placed either restrictions or outright bans on the exportation of their rice. Many of these same countries are now rumored or expected to reduce or eliminate their current restrictions or bans on exporting rice during the 2008/09 marketing year. If this should happen, it will have the effect of loosening up the supply of rice worldwide.

(3) Possible new regulations for speculators and index funds: Due to the dramatic increase in the price of commodity futures during the past year, both Congress and the Commodity Futures Trading Commission (CFTC) have conducted investigations into the impact speculators and index traders had in the hyper-extended prices. Because of the volatility in future prices, there is speculation new regulations could be applied to speculators and index funds. In anticipation of the possibility of new regulations, both speculators and index funds have recently liquidated a significant portion of their long positions in various futures markets. We believe this massive liquidation has contributed to the significant correction in grain futures this summer. Should new regulations significantly limit the ability of speculators and index funds to participate in commodity futures, this could take some of the upside energy out of commodity markets in the future.

(4) What if the oil price bubble burst: What if the current crude oil price bubble should burst during the upcoming year? Our initial reaction would be one of celebration. However, history shows there is a direct correlation between crude oil and grain commodity prices. Since so many of the farm inputs are oil or energy based, the direct correlation between oil and grain prices is obvious. However, since corn and soybeans are now a significant fuel source for energy, the direct correlation between oil and grain prices has become even stronger. Should crude oil prices have a major correction, we believe the price of grain commodities, including rice, would be dragged down in any possible oil price collapse.

As you can see, there are a lot of potentially bullish and bearish developments that will influence U.S. rice prices during the 2008/09 marketing year. We believe the size of the 2008 U.S. and Asian rice crops will have a significant impact on rice prices during the upcoming year. Once the 2008 U.S. rice harvest is complete, we anticipate export demand for U.S. rice will return and help support U.S. rice prices. We also believe the battle for acres will keep U.S. rice prices strong into the 2009 spring planting season. Bottom line: If U.S. rice prices do not stay competitive with alternative crops, U.S. rice acres will go down dramatically in 2009. Overall, we remain optimistic about the rice prospects for the 2008 rice crop.

Sincerely,

Keith Glover
President & CEO