With revisions to acreage and yield, USDA in July estimated long grain rice production at 169.5 million hundredweight, 2.5 million hundredweight below the June 2005 estimate but the largest production on record. This growing season has been extremely problematic due to weather extremes, so the possibility exists that production could slip below last year's 168.9 million hundredweight.
USDA lowered its 2005-06 beginning long grain stocks estimate to 22.3 million hundredweight, 2.7 million hundredweight below the June estimate but 12 million hundredweight above the previous marketing period and the second largest beginning stocks since 1987.
Adding record 2005-06 long grain rice imports (mostly aromatic and fragrant rice) at 11.25 million hundredweight, the total 2005-06 supply would be a record 203 million hundredweight. Total U.S. long grain supply for the previous five marketing periods averaged 180 million hundredweight. U.S. long grain imports originate mostly in Thailand, India, and Pakistan.
Close attention should be given to 2005-06 total long grain use, which is projected by USDA at a record 184 million hundredweight, 16.3 million hundredweight above 2004-05. Total long grain use for the previous five marketing periods has averaged 163 million hundredweight.
Exports account for 11.5 million hundredweight of the 16.3 million hundredweight in new use over 2004-05. 2005-06 long grain exports are projected to be 93 million hundredweight, the second largest on record behind 2002-03, when long grain exports were a record 99.5 million hundredweight. Latin American and Middle East long grain demand will be key to determining total long grain exports as well as July and August 2005 rice forfeitures.
Ending long grain rice stocks are projected at 19 million hundredweight, the fourth largest since 1987 and significantly below 26.8 million hundredweight in 2001. With projections of above average 2005-06 ending stocks, long grain rice prices will have limited potential for strength without new demand.
2006 global rice trade is projected to decline for the fourth consecutive year. Global rice trade in calendar year 2002 was 27.8 million metric tons, 2003 was 27.6 million tons, 2004 was 27.1 million tons, 2005 25.9 million tons, and the 2006 projection is 25.2 million tons. U.S. rice producers are expected to export 3.8 million metric tons in 2006, up from 2005's 3.6 million tons. USDA raised 2005 export expectations for India, Pakistan, China, and Vietnam and lowered export projections for Thailand and Uruguay. USDA raised 2005 imports for the Philippines from 1.6 million tons to 1.9 million tons, Indonesian imports were raised from 700,000 tons to 900,000 tons, and Bangladesh from 700,000 tons to 750,000 tons.
2005-06 global production is projected at a record 410 million tons on 378.5 million acres, the second largest harvested acreage on record. China, India, Indonesia, and Bangladesh are projected to harvest larger crops. China will harvest an estimated 127.5 million metric tons, India 90 million tons, Indonesia 34.9 million tons, and Bangladesh 26.5 million tons. For the same period the United States will harvest an estimated 7 million tons.
Even with increased global rice production of 410 million milled metric tons, global rice consumption (417.6 million tons) exceeds production and global rice ending stocks are the lowest they have been since 1983-84.
That said, export prices weaken as global supply continues to be adequate for the demand. Mostly normal global weather, a food security conscious world, and food inflation fears are three of a number of reasons for limited global trade and price softness.
USDA data shows Thailand's high-quality 100 percent Grade B (free-on-board vessel, Bangkok) milled rice for export quoted at $282 per ton. The price weakness is primarily due to Vietnamese competition and weakening of the baht.
Even with strong sales Vietnam's export prices have declined, which USDA attributes to plentiful supplies due to the harvest of its summer-autumn crop. Price quotes for Vietnam's 5-percent brokens (free-on-board vessel, Ho Chi Minh City) were reported at $230 per ton.
For the same time period as the Thai and Vietnamese quotes, U.S. southern long grain (No. 2, 4-percent brokens, bagged, free-on-board vessel price at U.S. Gulf port) was quoted at $302 per ton.
A slide show that accompanies this article is available on the internet at http://www.aragriculture.org/agfoodpolicy/ricesitol/graphics/July222005.pdf
Bobby Coats is an agricultural policy analyst with the University of Arkansas.