The long-term outlook for the U.S. rice market includes continued low prices, a slow decline in rice acreage and a small but steady rise in average yield.
USDA economist Nathan Childs, speaking at the USA 2001 Rice Outlook Conference in St. Louis, also projected: fractional growth in rice production; continued expansion in domestic use and imports; a decline in U.S. exports (but not in the next two years); a gradual rise in global and U.S. rice prices; and continued marketing loan payments.
“Prices haven't been this low in 15 years,” Childs said. “And they haven't remained this low, for this long since the early 1970s.”
This year's bin-busting rice crop sure didn't help prices. It was a record producer in many ways — some good, some not so good.
It was the biggest crop ever, at 209.7 million cwt, with record-high yields on near-record acreage. “We've had two years in a row of record yields,” Childs said. “We are right at 6,300 pounds an acre. We had only crossed the 6,000-pound mark once before, in 1996.”
Acreage planted — at 3.3 million acres — was 9 percent above last year, but below the 1981 record of about 3.9 million acres. This year's acreage was high despite low prices at planting and no projections for any significant price increases. The Delta was responsible for all of the acreage increase. Texas, on a 20-year long decline in rice acreage, planted close to the same area as last year.
The record crop also produced a projected 50 percent increase in ending stocks, to 42 million cwt.
The latter resulted in the lowest season-average farm price since 1986-87 and expectations of near-record marketing loan gains for farmers. “This is the fifth year in a row of declining SAFP for rice,” Childs said.
U.S. per capita rice consumption continues to rise, according to Childs. The domestic market now accounts for nearly 60 percent of total U.S. rice use.
U.S. rice exports are expected to rise 3 percent in 2001 on stronger milled rice shipments, according to Childs.
However, Childs said, the United States “started the year with a huge carryover of outstanding sales from a year earlier. So we front-loaded export figures for 2001-02. So exports are up from a year earlier, due to the carryover of outstanding sales.”
Rough rice share of total U.S. rice exports has declined since 1998-99, according to Childs, and is projected at between 26 and 27 percent of total exports for 2001. Rough rice exports are expected to remain flat next year, at 23 million cwt.
“Brazil drove up rough rice exports in 1998, but they are a seasonal buyer,” Childs said. “If they have a bad domestic crop, they'll buy a lot. If they have a good crop, they won't buy any.”
Turkey, another rough rice buyer, “currently has a ban on paddy imports and a higher tariff on milled rice imports. We shipped very little rice to Turkey this year. We are well behind a year earlier.”
Latin America remains as the top market for U.S. rice exports. The European market is stable to declining, at 330,000 tons of rice. “The only significant Asian market is Japan, but exports to the country are basically flat,” Childs said.
“We did ship a little to South Korea, around 30,000 tons. Africa is a slightly-growing market for U.S. rice in some years. As of today, we are behind a year earlier.”
U.S. food aid shipments have declined substantially since 1999, although shipments to sub-Saharan Africa “have been strong.”
Long and short of it
Childs noted that the long-grain and medium/short-grain markets “are near mirror images from the previous year in terms of their outlooks.”
Long-grain plantings were up 22 percent in 2001, with production a record 162 million cwt. Ending stocks of long-grain rice more than doubled from last year, to almost 27 million cwt and are at the largest levels since 1986-87.
Prices for long-grain rice are at the lowest levels in 15 years, one reason for a 7 percent increase in exports, according to Childs. “Long-grain rice prices will be under intense pressure all year long. Last year, they were supported a little bit by a smaller long-grain crop.”
Domestic use of long-grain rice continues strong, up 13 percent from 2000. “A lot of that will be due to a shift from medium- to long-grain use for processed foods and beer.”
For 2001-02 U.S. plantings of medium-grain rice were down 26 percent, but growers produced record average yields. The crop was 24 percent smaller than in 2000 and total supplies are down 13 percent.
Domestic use of medium-grain rice is down 15 percent, with processed food and beer use responsible for most of the decline.
Exports are down 11 percent because of tighter U.S. supplies and higher U.S. prices. Ending stocks dropped by 9 percent, but the stocks-to-use ratio remains high.
The bulk of the medium-grain crop is produced in California, noted Childs.
What does record production, some increase in exports and domestic use and higher ending stocks mean for prices?
“There is going to be a lot of price pressure,” Childs said.
“In long-grain, we used to think that at below 13 percent stocks-to-use ratio, prices would rise and above it, prices would decline. We're way above that.”
In medium-grain “we have lower stocks, but they are not abnormally low. So no real change. That's going to limit the price increase. We do project and are seeing a little strengthening in medium-grain prices, both rough and milled. But it's not a lot.”
The economist pointed out that the difference between the U.S. price and the Thai price “is tightening — it should help U.S. exports. Yet we've seen very little exports sales.”