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Rice: U.S. Production Estimates Drastically Reduced

Ernst Undesser
By Michael Klein, USA Rice May 17, 2017

Rice: U.S. Production Estimates Drastically Reduced

Rice harvest. ©Debra L Ferguson Stock Photography

USA Rice’s World Market Price Subcommittee in Washington, D.C. yesterday to review with U.S. Department of Agriculture officials USDA’s first projections of global rice supply and demand statistics for 2017/2018, including world rice stocks, area and production estimates for the United States, and to review developments in key export markets.  Severe flooding in the mid-south, in particular in Arkansas, the top rice producing state in the country, have forced the industry to drastically reduce estimates for the coming year.

In March, government figures estimated 2017 rice acreage in the six major rice producing states to be 2.6 million acres, down 17 percent from the previous year.  Due to weather concerns including flooding in the mid-south, actual acreage could be significantly lower.

In fact, the University of Arkansas Extension Service has estimated more than 181,000 acres of rice planted in that state lost due to the flooding.  The next official estimate from USDA on rice area will be the Acreage Report to be released on June 30 by USDA’s National Agricultural Statistics Service (NASS).

Despite lowered domestic production estimates, global stocks are projected to increase slightly, largely on the back of Chinese rice production.

The U.S., that typically exports half the annual rice crop, is grappling with slow overall growth on exports.  Reported export sales through early May of medium grain rough, brown, and milled rice, primarily grown in California, are up 26 percent.  Long grain rough rice is up just seven percent, but long grain milled, including brown rice, which accounts for 25 percent of exports, is off as much as 13 percent.

“That 13 percent reduction in long grain milled exports is equal to a little more than 121,000 metric tons, which could easily be mitigated by just one rice sale to Iraq – something we used to do quite a bit of,” said Keith Glover, chairman of the subcommittee who made the same point to Secretary of Agriculture Sonny Perdue in another meeting yesterday.

Glover pointed out that despite a Memorandum of Understanding between the governments of the United States and Iraq to purchase U.S.-grown rice, no sales have been made in more than a year.

The industry continued to emphasize the importance of the monthly rough rice prices reporting by NASS, noting that success here is a combination of accurate reporting by the industry and comprehensive surveying by NASS of first handlers of dry rough rice.

“USDA’s rough rice prices determine the level of PLC payments to our growers, so they have to be an accurate reflection of what’s going on in the market.  This will continue to be a focus with NASS at each of our meetings,” Glover said.

The subcommittee also provided updates to USDA on USA Rice’s activities in Mexico, Iraq, and Taiwan, and received reports on the administration’s plans to renegotiate the North American Free Trade Agreement (NAFTA) and prospects for U.S. milled rice access in China.

“Mexico is our number one market, and we were very clear that we want the administration to ‘do no harm’ in any NAFTA renegotiation,” said Carl Brothers of Riceland Foods, a member of the subcommittee.  “We also expressed our continued frustration with the failure to complete the opening of the China market to U.S. rice.”

The next meeting of the subcommittee is slated for late October when harvest of this year’s crop will be underway and possibly even completed in some parts of the country.

Ernst Undesser
By Michael Klein, USA Rice May 17, 2017