A look at this month’s rice numbers reveals USDA’s estimate of a huge record U.S. all rice production. U.S. long grain rice production in 2004 is estimated to be the second largest behind the 2001 crop, while U.S. 2004 medium and short grain rice production is the third largest following 1994 and 2000 production years.
Weather, varieties, management, land resource development, technology and a strong desire by producers to increase productivity and reduce per unit costs all contributed to an outstanding 2004 production season.
The challenge now is to market this crop. This year’s U.S. all rice record production is 26.3 million hundredweight more than last year’s production, which is almost as much rice as Louisiana rice farmers produced in 2004 or about the amount of rice that Missouri and Texas rice farmers produced this year or about 27 percent of last year’s Arkansas production.
Turning the calendar forward to July 2005, then USDA expects U.S. all rice ending stocks to be the largest since 1986 with 1992 and 2001 a close second and third. U.S. long grain rice ending stocks will be the second largest since 1986, with 2001 being the largest and U.S. medium and short grain ending stocks will also be the largest since 1986.
Why the large U.S. 2004/05 ending rice stocks?
First, weak U.S. export rough rice sales and status quo U.S. total rice exports is the quick answer. 2004/05 U.S. rough rice exports are projected below the previous three years by 7 percent, 25 percent, and 0.6 percent, while total U.S. exports for the same period are projected by USDA to remain flat during 2004-05 and be 16.5 percent below 2002-03.
Large U.S. rice stocks then become a primary function of reduced Western Hemispheric demand for rough rice due to favorable weather, record U.S. production, increasing Latin American and global production. This has resulted in anemic global rice trade that is only slightly above last year and about 10 percent below the previous two years.
The lack of global rice trade expansion becomes a function of stable global weather with limited disruptive weather events, global economic stability, protectionism with China, India and other major global rice producers with a food security focus and/or a policy objective to reduce dependence on future imports.
The other most oft-asked question: At what point will global rice export prices be significantly lifted due to declining global rice stocks?
For the fourth consecutive year, global rice consumption will exceed production with devastating consequences on global rice stocks. One has to go back to 1983-84 to find global rice stocks as low as today’s. Global stocks as a percent of consumption are the lowest they have been since 1976-77. With ending global stocks at 16.6 percent of production the world can hardly afford a traumatic weather event.
Assuming no economic, weather, or major war trauma event that would be significantly disruptive to global rice production, I expect the global economic recovery to become a self sustaining economic expansion, and the trend toward slow improving Asian rice export prices with the U.S. price moving much closer to the Asian price.
The slide show that accompanies this article is available on the Internet at http://www.aragriculture.org/agfoodpolicy/ricesitol/slides/Delta_Farm_Press.pdf
Bobby Coats is Extension agricultural policy analyst with the University of Arkansas Cooperative Extension Service.