There were several revisions this month to the U.S. 2018/19 rice balance sheet. On the supply side, the production forecast was lowered 0.5 million cwt to 218.3 million due to a slightly reduced yield. In addition, imports were raised 1.0 million cwt to a record 28.0 million cwt, largely based on strong shipments of rice to Puerto Rico from China in September.
On the use side, all rice exports were lowered 2.0 million cwt to 96.0 million, largely based on a slower than expected shipment pace through late October. On balance, these revisions resulted in a 2.5-million cwt increase in the 2018/19 U.S. ending stocks forecast to 46.7 million cwt. The long-grain season-average price forecast was lowered slightly based on larger expected ending stocks.
In contrast, the California medium- and short-grain (SAFP) range was raised based on an upward revision in the 2017/18 SAFP reported by NASS in the October Agricultural Prices.
In the world market, the 2018/19 global production forecast was raised 3.6 million tons to 490.7 million tons, primarily based on a larger China crop forecast. China’s 2007/08-2017/18 production estimates were revised this month based on recently released data from China’s National Bureau of Statistics indicating larger area and bigger crops each year.
Production forecasts were also raised this month for Bangladesh and South Korea, but lowered for Argentina and the United States. Global rice consumption (including a residual component) is forecast at a record 488.4 million tons. With global production exceeding global use by 2.3 million tons, 2018/19 global ending stocks are projected to increase 1.4 percent to a record 163.0 million tons, up 17.8 million tons from the previous forecast.
The substantial upward revision is largely due to a much higher forecast for China’s ending stocks.
In the global market, the calendar year 2019 trade forecast was lowered 0.5 million tons to 49.2 million tons, up 1 percent from 2018 and the highest on record. Export forecasts for 2019 were lowered this month for Argentina, India, and Pakistan.
On the 2019 import side, Bangladesh’ import forecast was substantially decreased, while import projections for Brazil, the EU, Iraq, Madagascar, and the United States were increased. For long-grain milled rice, Thailand’s trading price quotes dropped slightly over the past month, while reported quotes for Vietnam and United States increased slightly.
U.S. 2018/19 Field Yield Lowered Fractionally
The 2018/19 U.S. rice production forecast was lowered 0.5 million cwt this month to 218.3 million cwt due to a slightly lower yield forecast for California. At 7,522 pounds per acre, the 2018/19 U.S. average yield is down 17 pounds from the previous forecast but up 15 pounds from a year earlier.
The yield forecast for California was lowered 100 pounds per acre this month to 8,500 pounds, up 1 percent from a year earlier but still below the 2015/16 California record of 8,890 pounds. U.S. harvested area remains estimated at 2.9 million acres, up 22 percent from a year earlier.
U.S. rice production is up 22.5 percent from a year earlier, mostly due to a substantial increase in plantings. The 2018/19 U.S. long-grain crop is forecast at 158.6 million cwt, down 0.4 million cwt from the previous forecast but up 24 percent from a year earlier. Almost all U.S. long-grain rice is grown in the South. Combined medium- and short-grain U.S. production is forecast at 59.7 million cwt, down 0.1 million cwt from the previous forecast but more than 18 percent larger than the 2017/18 crop.
Harvested area is estimated to be larger than a year earlier in all reported States, with Arkansas—harvesting 1.4 million acres—accounting for 60 percent of the 528,000-acre expected expansion in U.S. harvested area. Missouri posted the largest percentage area expansion in 2018/19, increasing 37 percent to 219,000 acres. Despite area expansions in all States, no State reported record rice area in 2018/19.
Field yields are forecast higher than last year in 2018/19 in California and Louisiana; lower in Mississippi, Missouri, and Texas; and nearly unchanged in Arkansas. With the possible exception of some final ratoon crop harvesting in Texas and Louisiana, harvesting of the 2018/19 U.S. rice crop is complete.
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Rice crops in 2018/19 are forecast larger than a year earlier in all reported States, with Arkansas accounting for 60 percent of the 40.1 million-cwt U.S. rice production increase. However, no State is projected to harvest a record rice crop in 2018/19. At 106.7 million cwt, Arkansas’ 2018/19 rice crop is projected up 29 percent from a year earlier, almost totally due to expanded area.
At 10.1 million cwt, Mississippi’s 2018/19 rice crop is projected up 20 percent from a year earlier, also due to expanded area. The Texas rice crop forecast of 13.6 million cwt is up 19 percent from a year earlier, also due to expanded area. Missouri’s 2018/19 production forecast of 15.3 million cwt is up 29 percent from a year earlier, due to an area expansion.
Louisiana’s 2018/19 projected crop of 30.4 million cwt is up 15 percent from a year earlier, due to expanded area and a higher yield. California’s revised production forecast of 42.2 million cwt is down 0.5 million cwt from the previous forecast but up 13 percent from a year earlier, also a result of both expanded area and a slightly higher yield.
U.S. 2018/19 Import Forecast Raised to a Record 28.0 Million Cwt
The 2018/19 U.S. rice supply forecast was increased 0.5 million cwt to 275.7 million cwt, as the fractionally smaller crop forecast was more than offset by a higher import forecast. Despite the downward revision, total supplies are forecast to be up 10 percent from a year earlier, a result of a much larger crop and record imports.
Long-grain total supply is forecast at 202.4 million cwt, down 0.4 million cwt from the previous forecast but 11 percent larger than a year earlier. Medium- and short-grain total supplies are forecast at 71.8 million cwt, up 6 percent from a year earlier. Although total supplies are forecast larger than a year earlier, they remain below record for all rice and for both classes of rice.
At a record 28.0 million cwt, the 2018/19 U.S. rice import forecast is up 1.0 million cwt from the previous forecast and 4 percent larger than a year earlier. The revised import forecast is based on delivery data reported by the U.S. Bureau of the Census through September 2018 and expectations regarding purchases the remaining 10 months of the 2018/19 market year.
Medium- and short-grain accounts for all of the upward revision in 2018/19 U.S. rice imports, with medium- and short-grain imports boosted 1.0 million cwt to 4.5 million cwt, 27 percent above a year earlier and the highest since the 2007/08 near-record of 6.2 million cwt.
This month’s upward revision in medium and short-grain imports is primarily due to a 21,000-ton shipment of rice from China into Puerto Rico in September. In 2017/18, China shipped a total of 9,300 tons of rice to Puerto Rico, compared with almost no shipments from 2008/09 through 2016/17 when the U.S. mainland supplied the bulk of Puerto Rico’s rice.
The recent sharp increase in China’s sales to Puerto Rico is due to much lower rice prices from China, tight U.S. supplies of medium- and short-grain rice in 2017/18 and early in 2018/19, and a U.S. freight cost disadvantage due to the 1920 Jones Act requirements of using a U.S. flagged vessel for U.S. shipments to Puerto Rico. Annual rice consumption in Puerto Rico is currently more than 150,000 tons, with medium- and short-grain accounting for the bulk of the consumption.
In some years, Puerto Rico buys small amounts of long-grain rice from Brazil. In 2006/07 and in 2007/08, China shipped more than 100,000 tons of rice to Puerto Rico, all medium- and short-grain, the major reason for the record U.S. medium- and short-grain imports in those 2 years.
U.S. 2018/19 long-grain imports remain forecast at a record 23.5 million cwt, fractionally above a year earlier. Aromatic varieties from Thailand, India, and Pakistan are expected to again account for the bulk of U.S. long-grain rice imports. Through September 2018, the pace of U.S. long-grain rice imports was 17 percent behind a year earlier but slightly ahead of the August-September pace from 2013/14 through 2016/17.
Long-grain imports from Thailand, the largest supplier of rice to the United States, were 25 percent behind a year earlier through September. Imports from India, the second largest supplier, were about even with a year earlier. In recent years Brazil has increased its shipments of long-grain milled rice to the United States, supplying almost 39,000 tons in 2017/18, becoming the third largest supplier to the U.S.
Puerto Rico took about 17,000 tons of Brazil’s shipments to the United States in 2017/18, but Puerto Rico has yet to purchase any rice from Brazil in 2018/19.
Total U.S. rice carryin remains estimated at 29.4 million cwt, down 36 percent from a year earlier. Long-grain 2018/19 carryin remains estimated at 20.3 million cwt, 34 percent below a year earlier. Medium- and short-grain carryin remains estimated at 7.6 million cwt, also 34 percent below a year earlier and the smallest since 1999/2000. Stocks of brokens, included in the total stocks estimate, are not classified by class.
U.S. 2018/19 Export Forecast Lowered 2.0 Million Cwt
The 2018/19 total rice use forecast was lowered 2.0 million cwt to 229.0 million cwt, 3 percent larger than a year earlier but well below the 2016/17 near-record of 248.0 million cwt. Long-grain exports account for all of this month’s downward revision in 2018/19 total use. Long-grain total use is projected at 170.0 million cwt, 2.0 million below the previous forecast but 5 percent above a year earlier. Combined medium- and short-grain total use remains forecast at 59.0 million cwt, down 1.5 percent from a year earlier, with domestic use accounting for all of the decline.
Total U.S. rice exports in 2018/19 are projected at 96.0 million cwt, down 2.0 million cwt from the previous forecast but 10 percent larger than a year earlier. The downward revision was based on Census trade data through September, sales and shipment data from the weekly U.S. Export Sales through October 26, and expectations regarding U.S. sales and shipments the remainder of the 2018/19 market year.
In September 2018, the U.S. exported about 182,700 tons of rice (actual shipment weight), down 31 percent from a year earlier and the smallest since July 2007. August 2018 U.S. exports of 226,700 tons were 6 percent below a year earlier. Thus, for the U.S. to reach its 2018/19 market year projection of 96.0 million cwt, the shipment pace will need to increase.
In October, the U.S. sold an additional 90,000 tons—on top of around 30,000 tons sold in late August—of rice to Iraq. Through November 1, slightly more than 31,000 tons had been exported to Iraq, with 90,000 more tons expected to ship. The sales to Iraq are all long-grain milled rice.
Venezuela has been a major factor in the weaker U.S. shipment pace thus far in 2018/19, taking just 13,766 tons through late October compared with 58,870 tons a year earlier. In 2017/18, the United States sold 97,600 tons of rice to Venezuela, down from a record 322,500 tons in 2016/17, with Brazil capturing much of the market in 2017/18.
On an annual basis, the expected increase in 2018/19 U.S. exports is based on larger supplies, more competitive U.S. prices, and weaker shipments from Australia and Egypt—top competitors in the global medium- and short-grain market.
U.S. rough rice exports in 2018/19 are projected at 32.0 million cwt, down 1.0 million cwt from the previous forecast but up 12 percent from 2017/18. The U.S. is expected to regain some lost market share in traditional U.S. long-grain rough-rice markets in Latin America, primarily in Mexico, Central America, and Venezuela. The United States has recently lost market share in these markets to more competitively priced South American exporters. Colombia has recently emerged as a large buyer of U.S. rough rice, shifting from milled to rough.
U.S. milled rice exports (combined milled and brown rice exports on a rough basis) in 2018/19 remain projected at 64.0 million cwt, down 1.0 million cwt from the previous forecast but almost 10 percent above a year earlier. Weaker milled rice shipments to date to Mexico and Colombia are behind the downward revision in U.S. milled rice exports.
On an annual basis, Latin America (primarily Haiti) and Northeast Asia are likely to import more U.S. milled-rice in 2018/19, with the expected growth in Northeast Asia mostly accounted for by shipments purchased in 2017/18. Haiti is expected to remain the largest market for U.S. long-grain milled rice, likely increasing purchases.
U.S. sales to the Middle East are expected to be larger as well, also a result of larger supplies and more competitive U.S. prices.
U.S. long-grain exports in 2018/19 are projected at 67.0 million cwt, down 2.0 million cwt from the previous forecast but 6 percent above a year earlier. The downward revision is largely based on weaker-than-expected shipments to some Latin American buyers, particularly Venezuela. The year-to-year increase is primarily based on lower U.S. prices and larger supplies.
Latin America, the largest market for U.S. long-grain rice exports, is expected to account for much of the increase, with rough rice remaining the bulk of these sales. The Middle East is expected to purchase more U.S. long-grain rice as well, with these sales mostly milled rice.
Combined medium- and short-grain U.S. exports remain projected at 29.0 million cwt, up 22 percent from the 2017/18 abnormally low level despite expectations of virtually no sales to Turkey, typically an important buyer. Some of the expected increase in 2018/19 is due to shipments to Northeast Asia that were purchased in 2017/18.
In addition, the United States is likely to pick-up additional sales in parts of the Middle East and North Africa other than Turkey, due to Egypt’s tight supply situation and decision to import rice and a second consecutive weak crop in Australia, also typically a competitor in the global medium- and short-grain market.
Total domestic and residual use of rice in 2018/19 remains projected at 133.0 million cwt, more than 1 percent below a year earlier. In addition to food and industrial uses of rice—primarily as pet food and beer—domestic and residual use accounts for post-harvest losses, including unreported losses in processing, marketing, and transporting.
These losses are typically proportional to the crop size. Long-grain domestic and residual use remains projected at 103.0 million cwt, 4.5 percent larger than the 2017/18 level. Medium- and short-grain domestic and residual use remains projected at 30.0 million cwt, 17 percent below the abnormally high level for 2017/18.
U.S. Ending Stocks Projected To Increase 59 Percent in 2018/19
U.S. ending stocks of all rice in 2018/19 are projected at 46.7 million cwt, an increase of 2.5 million cwt from the previous forecast but 59 percent larger than a year earlier. The substantial buildup in ending stocks in 2018/19, despite stronger total use, is due to a 22.5-percent increase in production. The 2018/19 stocks-to-use ratio is projected at 20.4 percent, well above the abnormally tight 13.2 percent in 2017/18.
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The stocks situation varies somewhat by class. Long-grain 2018/19 ending stocks are projected at 32.4 million cwt, up 1.6 million cwt from the previous forecast and 59 percent larger than a year earlier. These are the largest long-grain ending stocks since 2010/11. The long-grain stocks-to-use ratio is projected at 19.1 percent, up from just 12.6 percent in 2017/18. Ending-stocks and the stocks-to-use ratio of these levels are expected to put downward pressure on U.S. long-grain prices during the 2018/19 market year.
For medium- and short-grain rice, 2018/19 ending stocks are projected at 12.8 million cwt, up 0.9 million cwt from the previous forecast and 68 percent larger the year-earlier abnormally low level. The medium- and short-grain stocks-to-use ratio is projected at 21.8 percent, up from just 12.8 percent in 2017/18.
U.S. Rough Rice Prices Expected To Drop in 2018/19
There were major revisions to the 2017/18 monthly cash prices and marketings reported by NASS, resulting in revised 2017/18 season-average farm price (SAFP) estimates for all rice and for medium- and short-grain rice in both regions, with California receiving the largest revisions. For California medium- and short-grain rice, the 2017/18 SAFP was raised $2.10 to $18.70 per cwt, well above $14.10 a year earlier.
In contrast, the southern 2017/18 medium- and short-grain SAFP was lowered 60 cents to $11.50 per cwt, up 40 cents from a year earlier. The U.S. medium- and short-grain SAFP was increased $1.20 per cwt to $16.20, well above $13.10 a year earlier. The 2017/18 all rice SAFP was increased 10 cents per cwt to $12.70, also well above $10.40 a year earlier. The 2017/18 long-grain SAFP remains estimated at $11.70 per cwt, up from $9.61 a year earlier.
Monthly reported cash prices declined in September from a month earlier for both classes of rice and all regions. The September long-grain rough-rice cash price was reported at $11.40 per cwt, down 50 cents from August; the decline was largely a response to the harvesting of a larger crop, with peak harvest in the Delta that month.
The southern medium- and short-grain rough rice price was reported at $12.70 per cwt, down $1.30 from August. The bulk of this crop is grown in Arkansas, with peak harvest in September.
The California medium- and short-grain September price was reported at $18.30 per cwt, down 50 cents from the August price. The California harvest began about mid-month September and peaked in October.
The U.S. medium- and short-grain September price was reported at $16.50 per cwt, down from $18.20 in August, the decline is partly due to light sales of California medium- and short-grain rice prior to a significant harvest in the State. Finally, the U.S. all-rice September cash price was reported at $12.20 per cwt, down $1.70 from August.
There were several revisions this month to the 2018/19 U.S. season-average farm price forecasts. The 2018/19 long-grain SAFP is projected at $10.20-$11.20 per cwt, down 10 cents on both the high and low end. The reduced price is largely based on a larger expected carryout. The southern 2018/19 medium- and short-grain season-average farm price is projected at $11.60-$12.60 per cwt, up $1.00 on both ends from the previous forecast.
The substantial upward revision is based on a much higher 2018/18 California SAFP range. The California 2018/19 SAFP was increased to $17.30-$18.30 per cwt, up $1.50 on both the high and low ends of the range. The increase was largely based on a revised 2017/18 SAFP that was significantly higher.
The U.S. 2018/19 medium- and short-grain season-average farm price is projected at $15.60-$16.60 per cwt, up $1.40 on both ends of the forecast range. The all-rice 2018/19 season-average farm price is projected at $11.50-$12.50 per cwt, up 30 cents on both ends of the range from the previous forecast.