Rice Outlook: Domestic, Residual Use Forecast Boosted; Exports Lowered

This month, USDA raised its 2017/18 domestic and residual use forecast 5.0 million cwt to 120.0 million cwt based on lower than expected December 1 rice stocks. The export forecast was lowered 3.0 million cwt to 100.0 million cwt, largely based on a slower-than-expected shipment pace through December to Western Hemisphere markets.

On the supply side, the production forecast was lowered fractionally to 178.2 million cwt due to a lower area estimate. In contrast, imports were raised 0.4 million cwt to a record 24.9 million cwt, largely based on stronger-than-expected imports the first 4 months of the market year. The season-average farm price for long-grain was lowered, while it was raised for medium- and short-grain rice.

Domestic Outlook

U.S. 2017/18 Rice Crop Estimate Lowered to 178.2 Million Cwt

The 2017/18 U.S. rice crop estimate was lowered 0.2 million cwt to 178.2 million cwt, more than 20 percent below a year earlier. This month’s slight downward production revision is due to a lower area estimate. At 2.37 million acres, harvested area is 17,000 acres below the previous estimate and 23 percent below a year earlier and the smallest harvested area since 1987/88.

In contrast, the 2017/18 average yield of 7,507 pounds per acre is up 46 pounds from the previous estimate and 270 pounds above a year earlier, but still below the 2013/14 record of 7,694 pounds.

By class, the 2017/18 U.S. long-grain crop is estimated at 127.9 million cwt, up 1.7 million cwt from the previous forecast but 23 percent below a year earlier.

The year-to-year long-grain production decline is the result of a 27-percent decline in harvested area to 1.75 million acres. The average long-grain yield of 7,314 pounds per acre is up 387 pounds from a year earlier. Combined medium- and short-grain production is estimated at 50.4 million cwt, down 1.9 million cwt from the previous estimate.

The year-to-year long-grain production decline is the result of a 10-percent decline in harvested area and a 3-percent drop in yield.

This month, USDA lowered 2017/18 harvested area estimates in California (down 15,000 acres), Mississippi (down 4,000 acres), and Texas (down 9,000 acres), but raised its harvested area estimate 11,000 acres in Arkansas. Louisiana and Missouri harvested area estimates were unchanged.

Yield estimates for the 2017/18 rice crop were raised for Texas, Mississippi, Arkansas, and Missouri, but lowered for California and Louisiana. The Texas yield revision was the largest, up 15 percent from the previous forecast. The remaining yield revisions were less than 3 percent. These area and yield revisions increased production estimates in Arkansas, Missouri, and Texas, and lowered production estimates in California, Louisiana, and Mississippi.

The largest production revision was for California, where the 2017/18 crop estimate was lowered 2.1 million cwt. On a percentage basis, the largest production revision was for Texas, where production was increased 9 percent from the previous forecast.

Rice Production in 20017/18 Estimated Smaller in All Reported States

Rice harvested area in 2017/18 was lower than a year earlier in all reported States, with Arkansas reporting more than half of the 723,000-acre decline. At 1.1 million acres, rice harvested area in Arkansas is 27 percent below a year earlier and the smallest since 2013/14.

All of the Arkansas area decline is in long-grain, the dominant type of rice grown in the State. Low long-grain price expectations at planting and severe flooding early in the planting period account for most of the area decline.

In nearby Missouri, total rice area dropped 31 percent to 160,000 acres, also the lowest since 2013. Missouri also experienced severe flooding in late April and through early May.

Mississippi’s 2017/18 rice harvested area declined 41 percent to just 114,000 acres, the smallest since 1977/78. The decline was mostly due to higher expected returns for alternative crops, primarily soybeans.

These three States reported the largest percentage declines in area.

On the Gulf Coast, Louisiana’s 2017/18 harvested area dropped 8 percent to 395,000 acres, the smallest since 207/08. Harvested area in Texas dropped 16 percent in 2017/18 to 158,000 acres, the smallest since 2015/16 when much of the State was under water restrictions due to a severe long-term drought. Low price expectations at planting were a major factor behind the area decline on the Gulf Coast.

In California, rice harvested area dropped 17 percent in 2017/18 to 443,000 acres, the smallest since 2015/16 when the rice area faced water restrictions due to 4 years of drought. Record winter rains and snowfalls in the mountains, followed by massive snowmelt and spring flooding, account for most of California’s 2017/18 area decline.

Average yields in 2017/18 were higher than a year earlier in all reported States except in California and Texas, where yields were lower. Missouri’s 2017/18 yield increased 12 percent to a record 7,440 pounds per acre. Nearby Arkansas’ 2017/18 average yield of 7,490 pounds per acres was up 8 percent from a year earlier. Mississippi’s 2017/18 rice yield of 7,400 pounds per acre was up 3 percent from a year earlier.

In 2016/17, extreme heat during flowering and heavy rains near harvest time adversely affected crops in much of the South, especially in the Delta. Louisiana’s 2017/18 yield of 6,710 pounds per acre was up 1 percent from a year earlier. The Texas 2017/18 rice yield of 7,260 pounds per acre was 100 pounds above a year earlier.

California’s yield of 8,410 pounds per acre was down 5 percent from a year earlier and the smallest since 2012/13. Growers in California experienced heavy rains and flooding early in the season followed by abnormally high temperatures, as well as weed and pest problems.

Arkansas accounted for almost half the 45.9 million cwt decrease in U.S. rice production in 2017/18. At 82.6 million cwt, the Arkansas 2017/18 rice crop is 22 percent smaller than a year earlier, with long-grain accounting for all of the decline. The Arkansas production decline was due to smaller area; the yield was higher.

Missouri’s 2017/18 rice production declined 22 percent to 11.9 million cwt, also due to reduced area; the yield was record high. The decline was all long-grain, which accounts for the bulk of the State’s rice crop.

At just 8.4 million cwt, Mississippi’s 2017/18 rice crop was 39 percent below a year earlier and the smallest since 1984/85. As in the other Delta States, the decline was due to reduced area. Mississippi grows almost exclusively long-grain rice.

Louisiana’s rice production dropped 7 percent to 26.5 million cwt, also due to smaller plantings. The decline was all long-grain. In Texas, the 2017/18 rice crop was 17 percent smaller than a year earlier, a result of both smaller plantings and a weaker yield. The decline was nearly all long-grain, the bulk of the State’s rice crop.

At 37.3 million cwt, California’s 2017/18 rice production was 21 percent below 2016/17, with both area and yield reduced by weather. Production in California was smaller for all three classes of rice.

U.S. Total Rice Supplies Projected To Be 20 Percent Smaller in 2017/18

At 249.2 million cwt, total U.S. rice supplies in 2017/18 are projected to be 15 percent below a year earlier and the smallest since 2003/04. Long-grain total supplies are projected to decline 14 percent to 180.4 million cwt, a result of a smaller crop.

Combined medium- and short-grain supplies are projected at 65.3 million cwt, 20 percent less than a year earlier and the smallest since 2008/09. The decline is due to both a smaller carryin and a reduced crop.

All-rice beginning stocks remain estimated at 46.0 million cwt, down 1 percent from a year earlier. Long-grain 2017/18 beginning stocks remain estimated at 31.0 million cwt, 37 percent above a year earlier and the highest since 2011/12. In contrast, medium- and short-grain beginning stocks of 11.5 million cwt are 45 percent below a year earlier and the lowest since 2009/10.

The U.S. all-rice import forecasts for 2017/18 was raised 0.4 million cwt to 24.9 million cwt, up 6 percent from a year earlier and the highest on record. The upward revision was based on reported shipments through November and expectations regarding imports the remainder of the market year.

Through November, total imports (on an actual shipment-weight basis) were up 14 percent from a year earlier. Thailand and India account for most the stronger pace of U.S. rice imports in 2017/18, with Thailand accounting for more than 60 percent of the imports.

Long-grain imports were raised 0.2 million cwt to 21.5 million cwt, up 6 percent from a year earlier and the highest on record. Combined medium- and short-grain imports were raised 0.2 million cwt to 3.4 million cwt, up 6 percent from 2016/17.

Based on data reported in the January Rice Stocks, U.S. rice stocks on December 1, 2017,are estimated at 129.2 million cwt (rough equivalent of milled- and rough-rice stocks), 23 percent below a year earlier and well below expectations. The lower-than-expected December 1 stocks indicated stronger domestic and residual use from August to December.

By class, long-grain December 1 rice stocks are estimated at 84.5 million cwt, 23 percent below a year earlier. Combined medium- and short-grain December 1 stocks are estimated at 40.3 million cwt, 27 percent below a year earlier. Stocks of brokens, not reported by class, are estimated at 4.4 million cwt, 38 percent above a year earlier.

Rice stocks were estimated to be smaller than a year earlier in all reported States, with Arkansas accounting for about half of all rice stocks. At 64.4 million cwt, rice stocks in Arkansas on December 1 were 18 percent below a year earlier.

Louisiana’s December 1 rice stocks are estimated at 12.2 million cwt, down 36 percent from a year earlier. Mississippi’s December 1 rice stocks of 3.2 million cwt were 53 percent below a year earlier.

Rice stocks in Missouri on December 1 are estimated at 5.1 million cwt, 30 percent below a year earlier. In Texas, December 1 rice stocks are estimated at 8.8 million cwt, down 14 percent from a year earlier.

In California, December 1 rice stocks are estimated at 34.0 million cwt, 24 percent below a year earlier.

U.S. 2017/18 Rice Export Forecast Lowered 3.0 Million Cwt to 100 Million

Total use of rice in 2017/18 is forecast at 220.0 million cwt, up 2.0 million cwt from the previous forecast but 11 percent below a year earlier. This month, an upward revision in the domestic and residual use forecast more than offset a reduction in exports. By class, long-grain total use was increased 2.0 million cwt to 164.0 million cwt, still 8 percent below a year earlier.

Combined medium- and short-grain total use remains forecast at 56.0 million cwt, 20 percent below a year earlier. In 2017/18, both exports and domestic use are limited by much smaller supplies.

Total domestic and residual use in 2017/18 is projected at 120.0 million cwt, up 5.0 million cwt from the previous forecast but still 9 percent below a year earlier. This month’s downward revision was largely based on implied use from August through November and expectations regarding use the remainder of the market year.

Long-grain accounted for all of this month’s upward revision in total domestic and residual use. Some of the year-to-year decline in domestic use is likely due to a smaller residual associated with a smaller crop. The residual accounts for post-harvest losses in transporting, milling, and marketing the rice as well as any statistical error in another account.

At 93.0 million cwt, long-grain domestic and residual use is up 5.0 million from the previous forecast,but 7 percent below a year earlier. Combined medium- and short-grain domestic and residual remains projected at 27.0 million cwt, 15 percent below a year earlier and the smallest since 1988/89.

Total U.S. rice exports in 2017/18 are projected at 100.0 million cwt, down 3.0 million cwt from the previous forecast and 14 percent below a year earlier. The downward revision was based on Census shipment data through November, sales and shipment data through January 4 reported in weekly U.S. Export Sales, and expectations regarding sales and shipments the remainder of the market year.

Through January 4, U.S. shipments and sales were behind a year earlier to the Western Hemisphere—despite strong sales to Haiti, a major factor in this month’s downward revision. Also, the January 4 U.S. Export Sales report corrected the Iraqi purchases in 2017/18 from 105,000 tons to 90,000 tons, another factor contributing to the reduced U.S. export forecast.

By class, the 2017/18 long-grain export forecast was lowered 3.0 million cwt to 71.0 million cwt, 10 percent below a year earlier.

The Western Hemisphere is the largest market for U.S. long-grain rice, with the majority of the rice shipped as unmilled rough-rice. Mexico, Central America, Haiti, Venezuela, Canada, and Columbia account for the bulk of the U.S. long-grain exports in the Western Hemisphere.

Outside the Western Hemisphere, the Middle East is currently the largest market for U.S. long-grain rice.

Combined medium- and short-grain exports in 2017/18 remain projected at 29.0 million cwt, 24 percent below a year earlier and the smallest since 2014/15, when a West Coast port strike delayed shipments until early in the 2015/16 market year.

Through early January, except for Canada, U.S. medium- and short-grain sales outside the core markets of Japan, Korea, and Taiwan have been extremely small. Canada regularly takes a much smaller amount of U.S. medium- and short-grain rice than any of the Northeast Asian buyers.

The current medium- and short-grain export forecast indicates few sales outside the core Northeast Asian markets and Canada.

By type, rough-rice exports are projected at 34.0 million cwt, down 2.0 million cwt from the previous forecast and 20 percent below a year earlier and the smallest since 2011/12. Through early January, there have been virtually no U.S. rough-rice sales to North Africa and the Middle East.

These two regions take exclusively medium- and short-grain rough-rice. U.S. rough-rice sales to top long-grain buyer Venezuela have been well below a year earlier as well.

Milled rice exports (combined milled and brown rice exports on a rough-rice basis) are projected at 66.0 million cwt, 1.0 million cwt below the previous forecast and 11 percent below a year earlier. The 15,000-ton reduction in the Iraqi purchase was a major factor in the reduced 2017/18 milled rice export forecast.

Haiti, Japan, Canada, South Korea, Taiwan, Saudi Arabia, Jordan, and Iraq are the top markets for U.S. milled rice.

The 2017/18 U.S. ending stocks forecast was lowered 1.8 million cwt to 29.2 million cwt, 37 percent below a year earlier and the smallest since 2003/04. The stocks-to-use ratio is estimated at 13.3 percent, well below 18.6 percent a year earlier.

The long-grain 2017/18 ending stocks forecast was lowered fractionally to 16.4 million cwt, 47 percent below a year earlier. The long-grain stocks-to-use ratio of 10.0 percent is well below 17.4 percent a year earlier. The long-grain stocks-use-ratio rarely drops below 10 percent.

The 2017/18 medium- and short-grain ending stocks forecast was lowered 3.0 million cwt to 16.6 million cwt, nearly unchanged from a year earlier.

U.S. 2017/18 Season-Average Long-grain Farm Price Lowered

This month, USDA lowered its season-average farm prices (SAFP) for long-grain rice, but raised it for combined medium- and short-grain rice. Revisions were largely based on reported NASS prices through November and expectations regarding prices the remainder of the 2017/18 market year.

The 2017/18 U.S. long-grain SAFP was lowered 30 cents on both ends of the forecast range to $11.30 to $12.30 per cwt, still up from $9.64 a year earlier. The southern medium- and short-grain price was also lowered 30 cents on both ends of the forecast range to $11.50 to $12.50 per cwt, still up from $10.10 a year earlier.

In contrast, the California 2017/18 medium- and short-grain SAFP was raised 50 cents on both ends of the forecast range to $15.50 to $16.50 per cwt, up from $13.70 a year earlier.

The U.S. medium- and short grain SAFP was raised 30 cents on both ends of the forecast range to $14.50 to $15.50 per cwt, well above $12.90 a year earlier. The U.S. 2017/18 all rice SAFP was lowered 20 cents on both ends of the forecast range to $12.10 to $13.10 per cwt, also well above $10.40 a year earlier.

In late December, USDA reported a long-grain monthly average cash price for November of $11.50 per cwt, up 30 cents from October. The California November medium- and short-grain cash price was reported at $15.60 per cwt, $2.00 from October. The November southern medium- and short-grain price was reported at $11.60 per cwt, up 10 cents from October and the sixth consecutive monthly increase.

The November U.S. medium- and short-grain price was reported at $14.80 per cwt, up $2.10 from October. The all-rice November price was reported at $12.50 per cwt, up 90 cents from October.

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