To Our Valued Growers,
Sun Valley Rice is pleased to announce an increase in our Grower Harvest Advance for the 2017 Crop Pool Cal-Rose, from $3.00/cwt over loan to $5.00/cwt over loan.
After careful analysis, our management team has concluded that the strength we are seeing currently in the domestic and global markets, coupled with the downward trend in planted acres in 2017 (compared against 2016), suggests a stronger outlook than previously held.
As many are aware, the enormous 2016 crop has taken tremendous amount of effort to effectively market and move. Supply and demand rules continue to exist today – the 2016 crop had the predictable but unfortunate result of lower prices.
A great deal of the 2016 inventory was moved out of California at low prices – which is both good news and bad news, in our view: It’s good that it was moved, but bad that it was moved at lower prices. But, as they say, “low prices cure low prices.”
The God-sent rains of last winter didn’t seem to stop, and as you know all too well, that has led to a reduction in planted acres this year. We believe there are 450,000 to 460,000 acres planted for 2017, which bucks the current estimates of 445,000 to 500,000 acres.
While we are bullish on the market, we caution that a runaway market usually causes markets to run away. And we remind our growing community that in many years, California has turned a short crop into a long crop by taking too much pride in our values.
In our opinion, a 2017 Crop Harvest Advance of $5.00/cwt is appropriate as an advance against a larger final return. We look forward to the continued relationship and trust that we have enjoyed together, and we are always available to answer any questions.
Best wishes for a pleasant summer and a strong harvest.
Yours sincerely,
The Sun Valley Rice Company Management Team
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