You could say the United States produced two rice crops in 2005, one big, the other small.
According to USDA, the U.S. rice crop for all classes was just short of a record for production. But a closer look reveals that the long-grain crop, which comprises most of U.S. plantings, was what really put the crop over-the-top, while the medium-grain crop was woefully short — in area and production.
Here's a look at the total picture, and a breakdown by class, provided by Nathan Childs senior rice market analyst, USDA's Economic Research Service. Childs spoke at the 2005 USA Rice Outlook Conference in Austin, Texas, in December.
The 2005 U.S. rice crop is projected at about 221 million hundredweight, the second largest on record, after last year's 230 million hundredweight crop. “Based on area, it could have been the largest on record, but average yields of 6,603 pounds per acre were down about 5 percent from last year's 6,942 pounds.
By class, medium grain production dropped dramatically in 2005, about 26 percent from the year before, with both yield and area declining, noted Childs. Meanwhile, the United States produced a record long-grain crop for the second year in a row. “Arkansas has had two back to back record producing seasons for long grain rice.”
Total use is also expected to be a record at 247 million hundredweight, and projected exports are close to an all-time record at 121 million hundredweight, according to Childs. “This includes a big increase in milled rice exports, with only a marginal increase in rough rice exports. Much of the milled rice exports are going to Iraq, which has not traditionally been a U.S. market. It's all long grain rice.”
Ending stocks of all rice have shrunk to 26 million hundredweight, creating a stocks-to-use ratio of 10.5 percent.
Meanwhile, medium-grain rice stocks are down to about 6 million hundredweight, “which are pipeline stocks. This is a plummeting of the stocks-to-use ratio (from 22 percent in 2004 to 10.1 percent in 2005) and the lowest ratio ever recorded for medium grain,” Child said.
“We're also looking at smaller exports of medium grain rice since there is not enough rice to move and a massive drop in ending stocks, the lowest on record since 1982-83. The only thing holding medium grain exports back is supply.”
The short supply has created a lot of upward price pressure in the medium rice market which is having some affect on long grain rice prices, also in a tight supply situation. “In addition, we could see a little boost in long-grain prices based on tighter global supplies. Long grain prices have been rising, certainly since September.”
The tighter rice supplies are in major exporting countries — China, India and Egypt. “We also have very tight supplies in Australia which will last until their next crop is harvested in April and May. Until then, Australia is going to be out of the export market.”
USDA projects a season average farm price at a little under $8 per hundredweight, mostly driven by the higher medium grain price, Childs says.
In the longer term, assuming normal weather and with current farm policy still in effect, U.S. producers should expect higher input costs in 2006-07, according to Childs. “We project somewhat of a decline in plantings, absorbed mostly by the South. California will likely bounce back from weak plantings in 2005.”
Yields are expected to rebound in the coming U.S. crop. “In 2005-06, the United States had a big yield reduction of 5 percent because of weather problems in both producing regions. With normal weather, we should get near-record yields in 2006-07.”
For new crop rice, USDA projects near-record production, smaller carry-in and smaller total supply, due to strong use. “We look for continued growth in the domestic market, but weaker exports due to lack of U.S. supplies and slightly higher prices. We're also looking at higher global prices driven by tighter supplies.
“However, we expect the U.S. price to decline a little bit in 2006-07 as we expect medium grain prices to drop sharply, with the return of production to California and a bounce back in Australia. We could see the long-grain rice price drift up a little bit due to smaller supplies.”