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Rice Outlook: U.S. Production Forecast Lowered 5 Percent

Ernst Undesser
From USDA July 14, 2017

Rice Outlook: U.S. Production Forecast Lowered 5 Percent

©Debra L Ferguson Stock Photography

The U.S. 2017/18 production forecast was lowered 5 percent to 191.3 million cwt based on a smaller harvested area estimate. At 2.48 million acres, harvested area in 2017/18 is 20 percent below a year earlier. Forecasts for both 2017/18 domestic use and exports were lowered this month, largely due to smaller supplies and higher expected prices.

 

 

Despite a 3-percent reduction in the total use forecast, 2017/18 U.S. ending stocks were lowered 4 percent to 32.6 million cwt. Season-average price forecasts for 2016/17 and 2017/18 were revised higher this month for both classes of rice.

Domestic Outlook

U.S. 2017/18 Harvested Area Estimate Lowered 5 Percent from the Previous Forecast

A 123,000-acre downward revision in the 2017/18 U.S. harvested area estimate to 2.48 million acres reduced the U.S. rice production forecast nearly 5 percent to 191.3 million cwt, almost 15 percent smaller than a year earlier. This reduction is based on the NASS Acreage report, released June 30.

The average yield was reduced fractionally this month to 7,707 pounds per acres solely due to area shifts by State and class. The average yield is up 6.5 percent from a year earlier and the highest on record. The yield forecast is based on 1997/98-2016/17 trend yields by class. The first survey-based forecast for the 2017/18 U.S. rice crop will be reported in the NASS Crop Production released on August 31.

By class, the U.S. 2017/18 long-grain production forecast was reduced 4 percent to 136.4 million cwt this month, a drop of 18 percent from a year earlier. The 2017/18 combined medium- and short-grain production forecast was lowered 7 percent to 54.9 million cwt, down 5 percent from 2016/17.

Data from the June survey by NASS of actual 2017/18 plantings indicated farmers sowed 2.56 million acres of rice, down 64,000 acres from the reported March planting intentions and 19 percent below a year earlier. The planting estimate was lowered from March this month in Arkansas, California, and Missouri, but raised in Texas. Planted area estimates were unchanged from March for Mississippi and Louisiana.

California reported the largest decline in planted area from March, a drop of 8 percent due to severe flooding early in the season.

In addition, due to adverse impacts of record and near-record flooding in much of the Delta—especially in Arkansas—in late April and early- and mid-May, total harvested area was reduced 123,000 acres from the May forecast based on a higher than typical abandonment of planted rice acres.

Harvested area is expected to decline in all reported States in 2017/18, with Arkansas accounting for two-thirds of the U.S. reduction. At 1.11 million acres, Arkansas’ harvested area is down 27 percent from a year earlier, a result of both low price expectations in March and historic flooding in mid-Spring. Long-grain accounts for all of the State’s expected decline in harvested area in 2017/18.

In nearby Missouri, harvested area is expected to drop 21 percent in 2017/18 to 183,000 acres. Missouri was also adversely impacted early in the season by flooding. The State grows almost entirely long-grain rice.

Mississippi’s 2017/18 harvested area is estimated at 118,000 acres—all long-grain—a drop of 39 percent from a year earlier, mostly due to higher expected returns on alternative crops.

Louisiana’s 2017/18 harvested area estimate of 394,000 acres is 8 percent below a year earlier. Long-grain accounts for most of Louisiana’s rice area and most of the expected decline.

In Texas, 2017/18 harvested area is forecast at 181,000 acres, down 3 percent from 2016/17, with long-grain—the dominant grain grown in the State—accounting for all of the decline.

At 495,000 acres, California’s 2017/18 harvested area is 8 percent below a year earlier, mostly due to heavy winter rains and snowmelt from a historic high snowpack. California grows almost exclusively medium- and short-grain rice.

Crop Progress Remains Behind a Year Earlier; Conditions Improved in Most States Since May

The progress of the 2017/18 U.S. rice crop remains slightly behind normal in parts of the Delta and in California, largely due to flooding earlier in the season. For the United States, 22 percent of the crop was reported headed by July 9, 5 percentage points behind a year earlier and 1 percentage point behind the U.S. average. Progress varies by State and region.

In Arkansas, 9 percent of the 2017/18 crop was reported headed by July 9, 4 percentage points behind both a year earlier and the State’s 5-year average. Progress was more advanced in the rest of the Delta.

In Missouri, 10 percent of the crop was reported headed by July 9, well ahead of just 3 percent a year earlier and 3 percentage points ahead of the State’s 5-year average.

Mississippi’s 2017/18 crop was reported 52 percent headed by July 9, well ahead of 28 percent a year earlier and the State’s 5-year average of 25 percent.

On the Gulf Coast, 60 percent of Louisiana’s 2017/18 rice crop was reported headed by July 9, down from 68 percent a year earlier and the State’s 5-year average of 64 percent.

In Texas, 70 percent of the 2017/18 rice crop was reported headed by July 9, 2 percentage points ahead of a year earlier and well ahead of the State’s 5-year average of 51 percent.

The California 2017/18 rice crop was reported just 3 percent headed by July 9, well behind the year-earlier record pace of 25 percent and behind the State’s 5-year average of 10 percent.

Despite several storms crossing the South and a wet June in most States in the region, crop conditions for the 2017/18 crop have been improving since mid-May in most States. For the week ending July 9, 72 percent of the U.S. crop was rated in good or excellent condition, down 1 percentage point from a week earlier but well above 65 percent in mid-May. U.S. crop conditions for the week ending July 11 were rated 4 percentage points above a year earlier. Like crop progress, crop ratings vary by State.

In Arkansas, 65 percent of the 2017/18 rice crop was rated in good or excellent condition for the week ending July 9, down 1 percentage point from a week earlier but well above the 49 percent reported for week ending May 21 shortly after the severe flooding. For the week ending July 9, 7 percent of the Arkansas crop was rated in poor or very poor condition, up 1 percentage point from a week earlier but much lower than the 20 percent reported for the week ending May 21.

In nearby Missouri, for the week ending July 9, 73 percent of the 2017/18 rice crop was rated in good or excellent condition, up 4 percentage points from a week earlier and 5 percentage points above the ratings for the week ending May 21. For the week ending July 9, just 2 percent of Missouri’s 2017/18 crop was rated in poor or very poor condition, down from 8 percent for the week ending May 21.

In Mississippi, 58 percent of the 2017/18 crop was rated in good or excellent condition for the week ending July 9, down 1 percentage point from a week earlier and well below the 79 percent reported for the week ending May 21. Conditions in Mississippi are rated well below the 76 percent reported good or excellent a year earlier. The State received substantial rain in June, and conditions have been wet and humid. None of Mississippi’s crop was reported in poor or very poor condition for the week ending July 9, nearly unchanged since May.

On the Gulf Coast, 74 percent of Louisiana’s 2017/18 crop was rated in good or excellent condition for the week ending July 9, down 6 percentage points from a week earlier but unchanged from the week ending May 21. Louisiana has experienced more rain and storms than typical this year, impacting crop conditions.

In Texas, 57 percent of the 2017/18 rice crop was rated in good or excellent condition, down slightly from a week earlier and from mid-May but unchanged from a year ago.

California reported the highest crop ratings. For the week ending July 9, 100 percent of the California rice crop was rated in good or excellent condition, unchanged from a week earlier but up from 85 percent a year ago. Crop conditions in California have improved since late May.

U.S. 2017/18 Total Rice Supplies Projected To Drop 11 Percent to 261.6 Million Cwt

Total U.S. rice supplies in 2017/18 are projected at 261.6 million cwt, down 9.5 million cwt from the previous forecast and 32.5 million cwt below a year earlier. The year-to-year decline in U.S. rice supplies in 2017/18 is primarily due to a smaller crop; beginning stocks are fractionally lower and imports are projected slightly higher.

By class, U.S. long-grain supplies are projected at 188.9 million cwt, 1 percent below last month’s forecast and 10 percent smaller than a year earlier, a result of a smaller crop.

Combined medium- and short-grain total supplies are projected at 69.9 million cwt, 10 percent below the June forecast and nearly 15 percent below a year earlier and the smallest since 2008/09. The decline in medium- and short-grain supplies is largely due to a much smaller carryin.

At 46.1 million cwt, the 2017/18 all rice U.S. beginning stocks forecast is unchanged from the previous forecast but almost 1 percent below a year earlier. Long-grain beginning stocks are forecast at 31.5 million cwt, up 14 percent from the previous forecast and 39 percent above a year earlier and the highest since 2011/12.

Combined medium- and short-grain beginning stocks are forecast at 11.8 million cwt, down 24 percent from the previous forecast and 44 percent below a year earlier and the smallest since 2011/12.

U.S. all rice imports in 2017/18 are forecast at 24.2 million cwt, up 0.2 million from the previous forecast and 3 percent larger than a year earlier. Thailand is the largest supplier of rice to the United States, shipping mostly its jasmine rice—a premium aromatic rice—and much smaller amounts of glutinous rice. India and Pakistan are typically the next largest suppliers, shipping their premium basmati rice.

In years of tight U.S. supplies of broken kernels, the U.S. will often import these brokens from Asian sources. Long-grain imports remain projected at 21.0 million cwt, up about 3.5 percent from a year earlier. Medium- and short-grain imports are projected at 3.2 million cwt, an increase of 0.2 million cwt from the previous forecast but unchanged from a year earlier.

Specialty rice from Thailand accounts for the bulk of U.S. medium- and short-grain rice imports. The U.S. also regularly buys Arborio rice from Italy.

U.S. Export Forecast for 2017/18 Lowered 3.0 Million Cwt to 109.0 Million Cwt

Total use of U.S. rice in 2017/18 is projected at 229.0 million cwt, down 8.0 million cwt from the previous forecast and 8 percent below a year earlier. Forecasts for both domestic use (including a residual component) and exports were lowered this month and are both projected smaller than a year earlier.

At 120.0 million cwt, the total domestic and residual use forecast for 2017/18 is 5 million cwt below the previous forecast and 9 percent smaller than a year earlier. This month’s downward revision in domestic and residual use is largely driven by the reduced crop projection.

Long-grain domestic and residual use is projected at 92.0 million cwt, 3.0 million cwt below the previous forecast and 8 percent below the revised 2016/17 forecast. Medium- and short-grain domestic use is projected at 28.0 million cwt, down 2.0 million cwt from the previous forecast and 12.5 percent below the year-earlier revised forecast and the lowest since 2008/09.


Click Here to read AgFax Rice covering Arkansas, Mississippi, Missouri, Texas and Louisiana.


Total U.S. rice exports in 2017/18 are projected at 109.0 million cwt, down 3.0 million cwt from the previous forecast and 6 percent below the year-earlier revised forecast. Rough-rice exports are projected at 41.0 million cwt, down 3.0 million from the previous forecast and 1.0 million cwt below the year-earlier revised forecast.

The downward revision in U.S. rough-rice exports is based on a reduced 2016/17 forecast, tighter U.S. supplies, and higher expected prices for the remainder of the 2016/17 market year. Mexico, northern South America, Central America, and the Mediterranean are the major markets for U.S. rough-rice, with the Western Hemisphere taking almost exclusively long-grain.

U.S. milled-rice exports (combined milled- and brown-rice exports on a rough basis) remain projected at 68.0 million cwt, down 8 percent from the year-earlier revised forecast. The expected decline in 2017/18 is based on smaller U.S. supplies, higher U.S. prices, and more global competition in certain markets. Northeast Asia, Haiti, the Middle East, and Canada are the major commercial markets for U.S. milled rice.

By class, long-grain exports remain projected at 77.0 million cwt, 1.0 million cwt below a year earlier. The Western Hemisphere is the largest market for U.S. long-grain exports. The U.S. faces its strongest competition from Asian exporters in the Middle East and Sub-Saharan Africa. Medium- and short-grain exports are projected at 32.0 million cwt, down 3.0 million cwt from the previous forecast and 16 percent below the year-earlier near-record.

This month’s downward revision is based on tighter supplies and higher expected prices. Northeast Asia, primarily Japan, South Korea, and Taiwan, is again expected to be the largest market for U.S. medium- and short-grain rice. These purchases are nearly all made as part of WTO Uruguay Round agreements.

North Africa and the Middle East account for most of the remaining U.S. medium- and short-grain exports. Canada and Oceania purchase much smaller amounts. Egypt and Australia are the major U.S. competitors in the global medium- and short-grain market.

U.S. 2017/18 all rice ending stocks are projected at 32.6 million cwt, down 1.5 million cwt from the previous forecast and 29 percent below a year earlier. The ending stocks-to-use ratio is projected at 14.4 percent, down from 18.6 percent a year earlier.

Long-grain ending stocks are forecast at 19.9 million cwt, up 1.2 million cwt from the previous forecast but 37 percent below a year earlier. The long-grain stocks-to-use ratio is forecast at 11.7 percent, down from 17.7 percent a year earlier.

Medium- and short-grain ending stocks are forecast at 9.9 million cwt, down 2.7 million cwt from the previous forecast and 16 percent below a year earlier. These are the smallest medium- and short-grain stocks since 2008/09. The medium- and short-grain stocks-to-use ratio is forecast at 16.5 percent, down slightly from 16.8 percent.

U.S. 2016/17 Rough-Rice Export Forecast Lowered 3.0 Million Cwt to 42.0 Million Cwt

There were no changes to the 2016/17 all-rice supply side forecasts this month. However, by class, long-grain exports were lowered 0.2 million cwt to 20.3 million cwt based on purchases through May. The medium- and short-grain import forecast was raised 0.2 million cwt to 3.2 million cwt, also based on purchases through May.

On the use side, the forecasts for total domestic and residual use at 132.0 million cwt and for exports at 116.0 million cwt are unchanged from last month. However, there were important revisions by class.

For domestic and residual use, the long-grain forecast was lowered 2.0 million cwt to 100.0 million cwt, largely based on information from the June 30 Rice Stocks report indicating slower than expected domestic use from March-May. This was offset by a 2.0 million cwt increase in the medium- and short-grain domestic and residual use forecast to 32.0 million cwt, also largely based on information from the NASS June Rice Stocks report.

For both classes of rice, a residual component is included in the domestic use estimate.

On the 2016/17 export side, rough-rice exports were lowered 3.0 million cwt to 42 million cwt, largely due to Census corrections for 2016 (mostly for El Salvador), the total shipment pace through May, outstanding sales through June 29, and expectations regarding shipments in July.

In 2016, which impacts both the 2015/16 market year and the 2016/17 market year, the export corrections for El Salvador were unusually large, necessitating substantial reductions. Despite this month’s reduction, 2016/17 rough-rice exports are near-record.

In contrast, the milled-rice export forecast was raised 3.0 million cwt to 74.0 million cwt, also largely based on shipment pace through May, outstanding sales, and expectations regarding shipments in July.

Haiti, Saudi Arabia, and South Korea have been particularly strong markets for U.S. milled rice exports in 2016/17, with Haiti’s combined shipments and outstanding sales record high.

By class, U.S. 2016/17 long-grain exports are forecast at 78.0 million cwt, a drop of 2.0 million cwt from the previous forecast, mostly due to final Census corrections for El Salvador. Despite the downward revisions, U.S. long-grain exports in 2016/17 are projected to be the highest since 2007/08.

In contrast, the 2016/17 medium- and short-grain forecast was raised 2.0 million cwt to a near-record 38.0 million cwt, largely based on a very strong pace of shipments through late June, especially to Northeast Asia. Sales to North Africa and to the Middle East have been quite strong in 2016/17 as well.

The shifts in use by class impacted the ending stocks forecasts. For long-grain, the 2016/17 ending stocks forecast was raised 3.8 million cwt to 31.5 million cwt, 39 percent above a year earlier. The medium- and short-grain 2016/17 ending stocks forecast was lowered 3.8 million cwt to 11.8 million cwt, 44 percent below a year earlier.

Please note that the Census corrections released in July were for January 2014 through December 2016 and directly impact market years 2013/14, 2014/15, 2015/16, and 2016/17. Any revision to trade in a completed market year is offset by an equal but opposite revision in domestic and residual use.

Data from the June 30 Rice Stocks report indicate total U.S. rice stocks (combined milled and rough-rice stocks on a rough basis) on June 1, 2017 were 74.1 million cwt, virtually unchanged from a year earlier.

However, there were substantial differences year-to-year by class. For long-grain, rice stocks on June 1 were calculated at 50.1 million cwt, up 21.5 percent from a year earlier. In contrast, medium- and short-grain rice stocks on June 1 are calculated at 21.1 million cwt, down 28 percent from a year earlier. Stocks of brokens (not classified by class) on June 1 are calculated at 2.8 million cwt, down 18 percent from a year earlier.

By State, June 1 stocks were calculated higher than a year earlier in all reporting southern States. In contrast, California reported smaller stocks.

On June 1, 2017, Arkansas accounted for 56 percent of all reported U.S. rice stocks (combined rough- and milled- rice stocks on a rough basis). At 41.8 million cwt, Arkansas’ rice stocks on June 1 were 7 percent larger than a year earlier.

Louisiana’s June 1 stocks are calculated at 4.5 million cwt, up 5 percent from a year earlier. Texas rice stocks on June 1 are calculated at 4.5 million cwt, an increase of 37 percent from a year earlier. Missouri’s rice stocks of 3.3 million cwt were up 81 percent from June 1, 2016. Rice stocks on June 1 in Mississippi are calculated at 2.4 million cwt, an increase of 168 percent from a year earlier.

In contrast to the South, California’s June 1 rice stocks of 16.7 million cwt were 24 percent below a year earlier.

U.S. Season-Average Farm Price Forecasts Raised for 2016/17 and 2017/18

This month, season-average prices for each class of rice and for both growing regions were increased for 2016/17 and 2017/18. The 2016/17 upward revisions were largely based on reported cash prices through May and expectations regarding prices the remainder of the market year. In May, NASS-reported cash prices were higher than April for all reported categories. In addition, futures prices rose largely in response to the June 30 NASS Acreage report.

The 2017/18 long-grain season-average farm price (SAFP) is projected at $11.20-$12.20 per cwt, up 70 cents on both ends of the range from the previous forecast and higher than the revised $9.70 in 2016/17. The 2016/17 long-grain SAFP is up 10 cents from the mid-point of the June range.

The California medium- and short-grain 2017/18 SAFP is forecast at $14.00-$15.00, compared with a revised $13.50 in 2016/17. Like long-grain, the 2016/17 SAFP for California medium- and short-grain rice is up 10 cents from the June range.

The southern medium- and short-grain 2017/18 SAFP is forecast at $11.40-$12.40 per cwt, an increase of 60 cents on both the high and low ends of the range and up from $10.10 in 2016/17. The 2016/17 southern medium- and short-grain SAFP is up 10 cents from the June range of $9.90-$10.10 per cwt a year earlier.

The 2017/18 U.S. medium- and short-grain SAFP is forecast at $13.40-$14.40 per cwt, up $1.00 on both ends, compared with $12.80 in 2016/17. The 2016/17 medium- and short-grain SAFP is up 40 cents from the midpoint of the previous range of $12.10-$12.70 in 2016/17.

The 2017/18 all-rice SAFP is projected at $11.80-$12.80 per cwt, up 80 cents on both the high and low ends of the range from the previous forecast and higher than the revised $10.50 a year earlier. The 2016/17 all rice SAFP is up 20 cents from the June range.

In June, USDA reported a long-grain monthly average cash price for May of $9.35 per cwt, up 20 cents from April but still below the March price.

The California May medium- and short-grain cash price was reported at $13.60 per cwt, up 40 cents from April.

The May southern medium- and short-grain price was reported at $10.20 per cwt, up 10 cents from April. The May U.S. medium- and short-grain price was reported at $13.00 per cwt, up 40 cents from April. The all-rice May price was reported at $11.00 per cwt, up 23 cents from April and the highest since January.

Full report.

Ernst Undesser
From USDA July 14, 2017