It's been a while coming, but Mid-South farmers finally may have something to get excited about in the long-grain rice market, Riceland Foods Inc. executives said at the cooperative's annual meeting.
Last year, producers thought they saw a glimmer of hope after harvesting a long-grain crop of 325 million bushels, which was down 18 percent from the previous year. But that glimmer was almost short-circuited.
“You may recall that USDA adjusted the carry-in based on reported stocks on Aug. 1 of 73 million bushels, up 46 percent from a year earlier,” said Carl Brothers, senior vice president for international rice at Riceland. “The larger carry-in and increased imports resulted in a total supply of 430 million bushels or 9 percent below a year earlier.
“The increased carry-in stocks were a shock to the market which caused a short-term sell-off in Chicago futures before the full impact of the smaller 2006 long-grain rice crop was recognized by market participants, and prices gradually recovered.”
This year, lower carryover stocks, a still smaller long-grain crop and increased exports are expected to help keep the U.S. average farm price at $4.73 per bushel or 35 cents per bushel higher than for the 2006 crop. That's for long-grain and medium-grain rice combined.
USDA is forecasting 2007-08 long-grain, carry-in stocks of 63 million bushels, down 14 percent; production of 316 million bushels, down 3 percent; imports of 33 million bushels, up 6 percent; domestic use of 79 million bushels, down 3 percent; and exports of 184 million bushels, up 14 percent; will reduce the 2007-08 ending stocks to 30 million bushels, down 52 percent.
“The low carryout, along with rice competing for acreage with other grain prices, has created a friendly, if not bullish, marketing situation for U.S. long-grain rice this season,” said Brothers.
USDA is forecasting medium-grain supplies, which have remained fairly stable after California produced a record crop in 2004, to grow slightly because of increased medium-grain plantings in Arkansas last spring.
Production is expected to rise from 106 million bushels to 122 million bushels or 15 percent, while imports could decline from 14 million to 13 million bushels or 7 percent and the carry-in rise from 21 million to 22 million bushels for a total supply of 157 million bushels, up 11 percent.
Domestic use is expected to rise from 77 million to 79 million bushels or up 3 percent; exports from 42 million to 51 million bushels or up 21 percent; and total use from 119 million to 130 million bushels, up 9 percent. The medium-grain carryout could rise to 26 million bushels or 18 percent.
Brothers said Riceland had to make some adjustments in its marketing plan for long-grain rice because of the shorter production in the 2006-07 marketing year but was still able to exceed the plan in key markets.
“Long-grain rice sales to Haiti, though smaller than in 2005, exceeded plan by 7 percent,” he said. “Rice actually gained share as total U.S. exports to Haiti were down 15 percent. U.S. sales were down due to strong competition from South America.”
Caribbean sales were 30 percent above the 2005 results, primarily due to direct marketing efforts in individual countries. Parboiled rice sales to Saudi Arabia, on the other hand, were disappointing, falling 7 percent.
“The good news is that rice prices in competing countries are rising much faster than U.S. prices,” he said. “This opportunity could not come at a better time. The Saudi market has become more important since the European Union established emergency measures to prevent GE rice from entering the European Community.
“We might add that we're having some success in getting rice into the community. We're hoping that success will lead to origin testing being approved by the community. We're continuing to work on that.”
Another bright spot is that sales of long-grain, milled rice to Mexico were 22 percent above plan “after we were able to divert a large part of our rice shipments from Europe to Mexico.”
The shortfall in production has also hampered exports to Iraq and to Cuba where “sales have been crippled by the export payment regulations put in place by the U.S. government.” But Brothers remains hopeful sales can be resumed by improved relations between the two countries.
Riceland officials reported Riceland's 2006-07 marketing pools returned $4.38 per bushel for long grain rice and $5.28 per bushel for medium grain rice. The return for Riceland's soybean marketing pool was $6.85 per bushel compared to the harvest price of $6.11, and the wheat marketing pool return was $3.74 per bushel compared to the harvest price of $3.45.
The cooperative's revenue totaled $947 million for the year ended July 31, an increase of $10 million from 2006. Income before distributions was $549 million, up $60 million from the previous year.
During the annual meeting, which was held at the Arkansas State University campus in Jonesboro, Riceland officials honored Rep. Marion Berry, D-Ark., as its “Friend of the Farmer” for his work on behalf of Arkansas' farmers.
“Farmers and all residents of the first Congressional district have no better friend than Marion Berry,” said Danny Kennedy, Riceland president and chief executive officer. “He has fought tirelessly for the interests of farmers across the country and, in particular, farmers in the first district.”
Kennedy also defended the rice industry and Riceland's role in dealing with the GE rice issue that surfaced in August 2006 and led to severe disruptions in the rice markets.
“The rice industry took unprecedented steps to improve the marketability of the 2007 crop,” he said. “And I can tell you all segments of the industry are to be commended for their efforts” to monitor the seed supply.
“Our industry waited 14 months for USDA to report how the problem occurred. Unfortunately, when we received the report on Oct. 5 we really didn't learn a lot. The entire rice industry is continuing to work to clean up the situation.”