Rice Outlook: U.S. Production Forecast Lowered 9%

Rice being harvested in Prairie County, Arkansas. Photo: Fred Miller, University of Arkansas

There were several revisions this month to the 2019/20 U.S. rice balance sheet. On the supply side, the production forecast was lowered 9 percent to 198.1 million cwt because of a lower harvested area estimate. The area reduction was caused by excessive rainfall in much of the South that delayed plantings and is expected to result in prevented plantings. Long-grain rice accounted for all of the area reduction.

In addition, the 2019/20 import forecast was raised 1.2 million cwt to a record 29.2 million cwt based on recent purchases from China by Puerto Rico and on a smaller U.S. supply forecast. The 2019/20 carryin was increased 3.7 million cwt to 57.3 million cwt because of revisions in the 2018/19 balance sheet.

On the use side, total domestic and residual use was lowered 7.0 million cwt to 133.0 million cwt, and exports lowered 1.0 million cwt to 100.0 million cwt. On balance, these revisions resulted in a 5-percent reduction in the 2019/20 total supply forecast to 284.6 million cwt. The season-average farm price forecasts for both classes of rice were raised because of the reduced supply forecast.

There were revisions to the 2018/19 balance sheet this month as well. First, total imports were increased 0.7 million cwt to 28.7 million cwt based on a recent shipment of medium- and short-grain rice from China to Puerto Rico. On the use side, the 2018/19 export forecast was lowered 3.0 million cwt to 90.0 million cwt based on shipment pace through May and expectations that some sales made in 2018/19 will be shipped in the 2019/20 market year. Export forecasts were lowered for both classes of rice.

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U.S. 2019/20 Rice Crop Forecast Lowered 20.1 Million Cwt

This month, the 2019/20 U.S. rice production forecast was lowered by USDA by more than 9 percent to 198.1 million hundredweight (cwt), nearly 12 percent smaller than the 2018/19 crop. The downward production revision was due to a 268,000-acre reduction in the U.S. harvested area forecast to 2.57 million acres, 12 percent below a year earlier.

The substantial area reduction was due to excessive rainfall in the Delta that severely delayed and, in some areas, is expected to result in prevented plantings. The share of the planted crop that would actually be harvested was lowered slightly as well, also based on the excessive rains. The area reduction was primarily in Arkansas and Missouri, although all Southern rice growing States received above normal rainfall this spring.

Planting delays on the Gulf Coast were less severe than in the Delta, although crop progress was behind normal in all Southern rice producing States. The first survey of actual plantings will be released on June 28 in the NASS Acreage report.

The U.S. average yield for all rice is projected at a record 7,717 pounds per acre, up 21 pounds from the previous forecast and 25 pounds above a year earlier. The 2019/20 yield is based on long-term trend yields by class and does not reflect current weather or crop conditions. The first survey-based yield forecast for the 2019/20 U.S. rice crop will be reported in the August 12 NASS Crop Production.

The slight increase in the yield forecast this month is due to California accounting for a larger share of the total rice area in this month’s area forecast. California consistently achieves a higher yield than the Southern growing States.

By class, the 2019/20 U.S. long-grain production was lowered 20.1 million cwt to 139.5 million cwt, 15 percent smaller than the 2018/19 crop. Almost all U.S. long-grain rice is grown in the South. The 2019/20 combined medium- and short-grain crop remains forecast at 58.6 million cwt, almost 3 percent smaller than a year earlier. Most of the medium- and short-grain crop is grown in California. Arkansas accounts for the bulk of the Southern medium- and short-grain production.

Progress of the 2019/20 U.S. Crop Lags Normal Pace; Crop Conditions Rated Lower Than Last Year

Excessive rainfall this spring in the Southern rice growing States, which has continued in many areas, has delayed crop progress across the South, with delays most severe in the Delta. The degree of planting delay this year has been unprecedented in recent decades, with delays even exceeding the planting delays in 2011/12 which experienced substantial spring rainfall as well and above-average prevented plantings.

For the week ending June 9, 96 percent of the U.S. 2019/20 rice crop was reported planted, behind 100 percent last year and the U.S. 5-year average of 99 percent. In years of normal weather, U.S. rice plantings are typically completed by the end of May, with earlier planted rice associated with higher yields. Planting progress in 2019/20 varies by State, with the planting pace in the Delta lagging the most.

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In Arkansas, 95 percent of the 2019/20 rice crop was reported planted by June 9, behind both 100 percent last year and the 5-year State’s average of 99 percent. In nearby Missouri, 85 percent of the 2019/20 rice crop was reported planted by June 9, well behind both 100 percent last year and the State’s 5-year average of 98 percent. Both Missouri and Arkansas continued to receive rainfall during the week ending June 9 that further hindered operations and reduced the number of days suitable for field work to around 4 or fewer days.

In fact, in May, Missouri often had just one day a week suitable for field work. Mississippi’s 2019/20 rice crop was reported 97 percent planted by June 9, down slightly from 100 percent last year and the State’s 5-year average of 98 percent.

Planting was more advanced on the Gulf Coast, typical for the more southern growing region, although excessive rains during much of the early spring had delayed progress. For the week ending June 9, all of Louisiana’s 2019/20 rice crop was reported planted, unchanged from last year or the State’s 5-year average, despite getting off to a slow start.

The Texas rice crop was reported 99 percent planted by June 9, 1 percentage point behind last year but 1 percentage point ahead of the State’s 5-year average. Like Louisiana, Texas rice plantings got off to a slow start but were nearly caught up by June 9. For both Southwest Louisiana and the Texas Rice Belt, timely planting is critical to harvesting a partial second crop from the stubble remaining in the field from the main harvest.

This crop is called a ratoon crop, and in years when planting is delayed, farmers are often unable to harvest a ratoon crop because the growing season is too short. The result is a lower field yield, which includes rice from both harvests. Even without adverse weather, rice producers in Delta normally have too short a growing season to harvest a ratoon crop.

Like the South, California also experienced excessive rainfall early in the spring, not typical for the State that receives most of its rainfall in the winter. However, the California planting pace picked up rapidly after mid-May. For the week ending June 9, all of the California rice crop was planted, unchanged from last year but 1 percentage point ahead of the State’s 5-year average.

Similar to planting progress, emergence of the 2019/20 U.S. crop lags both last year and the recent 5-year average, with emergence particularly lagging in the Delta. For the United States, 87 percent of the 2019/20 crop had emerged by June 9, down from 99 percent last year and the U.S. average of 96 percent.

In Arkansas, 85 percent of the 2019/20 rice crop had emerged by June 9, well behind 100 percent last year and the State’s 5-year average of 99 percent. Progress in Missouri was even slower. At 79 percent, emergence in Missouri was well behind 99 percent last year and the State’s 5-year average of 96 percent. In Mississippi, 90 percent of the rice had emerged by June 9, down from 97 percent last year and the State’s 5-year average of 95 percent.

On the Gulf Coast, 97 percent of Louisiana’s 2019/20 rice had emerged by June 9, slightly behind both last year and the State’s 5-year average of 100 percent. In Texas, 93 percent of the 2019/20 rice crop had emerged by June 9, behind last year’s 95 percent and behind the State’s 5-year average of 96 percent. On the West Coast, 87 percent of California’s 2019/20 rice crop had emerged by June 9, slightly behind 91 percent last year but ahead of the State’s 5-year average of 82 percent.

Crop conditions across the South were reported lower than a year earlier, mostly due to excessive rains that have hindered field work and timely applications. For the United States, 61 percent of the 2019/20 rice crop was rated in good or excellent condition for the week ending June 9, down from 71 percent a year earlier. Crop conditions varied by State.

In Arkansas, 11 percent of the crop was rated in poor or very poor condition for the week ending June 9, more than double the share last year. Just 56 percent of the Arkansas 2019/20 crop was rated in good or excellent condition, down from 66 percent a year earlier.

In Missouri, 8 percent of the crop was rated in poor or very poor condition, and 48 percent was rated in good or excellent condition. Last year, just 4 percent of Missouri’s crop was rated in poor or very poor condition, and 69 percent was rated in good or excellent condition.

Conditions were rated higher in Mississippi than in the other 2 Delta States, with just 3 percent of the 2019/20 Mississippi crop rated in poor or very poor condition and 63 percent rated in good or excellent condition. However, compared with last year, Mississippi’s conditions were much lower, with none of the 2018/19 crop rated poor or very poor and 85 percent rated good or excellent.

Louisiana was the only Southern State where crop conditions were little changed from a year earlier. For the week ending June 9, 5 percent of Louisiana’s 2019/20 rice crop was rated in poor or very poor condition, just one percentage point higher than last year. Similarly, 68 percent of Louisiana’s 2019/20 crop was rated in good or excellent condition, one percentage point less than a year earlier.

In Texas, 4 percent of the 2019/20 rice crop was rated in poor or very poor condition, compared with 8 percent a year earlier. However, just 35 percent of the Texas crop was rated in good or excellent condition, substantially behind 57 percent a year earlier.

California reported the highest-quality crop conditions, typical for the United States. None of California’s 2019/20 rice was rated in poor or very poor condition, unchanged from last year. For the week ending June 9, 85 percent of the California 2019/20 rice crop rated in good or excellent condition, slightly below 90 percent last year.

Total U.S. Rice Supplies Projected to Change Little in 2019/20

Total U.S. rice supplies in 2019/20 are projected at 284.6 million cwt, down 5 percent from the previous forecast but almost 1 percent larger than a year earlier. The near-steady supply situation is the result of an extremely large carryin and record imports virtually offsetting a smaller crop. By class, long-grain total supplies are projected at 200.3 million cwt, down 8 percent from the previous forecast and more than 3 percent below a year earlier.

The substantial downward revision in long-grain supplies was due to a smaller crop forecast. Combined medium- and short-grain supplies are projected at 82.6 million cwt, up 3 percent from the previous forecast and almost 13 percent larger than a year earlier. The year-to-year increase is due to a very large carryin. Medium- and short-grain supplies are projected to be the highest since the 1982/83 record of 90.6 million cwt.

At 57.3 million cwt, the 2019/20 all rice carryin is up 7 percent from the previous forecast and up 95 percent from a year earlier. The 2019/20 carryin would be the largest since the 1986/87 record of 77.3 million cwt. By class, the 2019/20 long-grain carryin is projected at 37.3 million cwt, up 6 percent from the previous forecast and 83 percent larger than a year earlier. The upward revision was due to a weaker 2018/19 export forecast.

These are the highest long-grain ending stocks since the 1986/87 record of 49.3 million cwt. The 2019/20 medium- and short-grain carryin is projected at 18.6 million cwt, up 10 percent from the previous forecast and almost 145 percent larger than a year earlier. However, the medium- and short-grain carryin is still forecast to be below levels reported for 2015/16 and 2016/17. The upward revision in the 2019/20 medium- and short-grain carryin was due to a weaker 2018/19 export forecast and a higher 2018/19 import forecast.

U.S. all-rice imports in 2019/20 are forecast at a record 29.2 million cwt, up 1.2 million cwt from the previous forecast and nearly 2 percent larger than the year-earlier revised estimate. Aromatic varieties from South and Southeast Asia are expected to continue to account for the bulk of the U.S. rice imports. By class, U.S. 2019/20 long-grain imports are projected at a record 23.5 million cwt, up 0.5 million cwt from both the previous forecast and a year earlier.

Thailand’s jasmine rice and basmati rice from India and Pakistan are projected to continue to account for the bulk of the U.S. long-grain rice imports. The United States is expected to again import broken kernels, given the smaller U.S. crop and resulting lower millings, with Brazil a recent supplier of brokens. Combined medium- and short-grain rice imports are projected at 5.7 million cwt, unchanged from the year-earlier revised level.

In 2018/19, U.S. medium- and short-grain imports increased substantially due to several large purchases by Puerto Rico from China, a result of very competitive prices and lower freight rates compared to the U.S., factors unlikely to change in 2019/20. In 2006/07 and 2007/08, China supplied the bulk of Puerto Rico’s rice imports, but was largely absent from this market until 2017/18.

Specialty rices from Thailand are expected to account for most of the remaining U.S. medium- and short-grain rice imports. China and Thailand currently supply the bulk of U.S. medium- and short-grain imports. Italy also regularly supplies much smaller amounts of Arborio rice.

Forecasts for Exports and Domestic and Residual Use for 2019/20 Lowered

Total use of rice in 2019/20 is projected at 233.0 million cwt, down 8.0 million cwt from the previous forecast but up almost 4 percent from a year earlier. Domestic and residual use accounts for the bulk of the downward revision in the 2019/20 total use forecast. At 170.0 million cwt, long-grain total use is down 10.0 million cwt from the previous forecast but unchanged from a year earlier. Combined medium- and short-grain total use is projected at 63.0 million cwt, up 2 million cwt from the previous forecast and nearly 15 percent larger than a year earlier.

Total domestic and residual use in 2019/20 is projected at 133.0 million cwt, down 7.0 million cwt from the previous forecast and 1.5 percent smaller than a year earlier. The substantial downward revision is largely based on smaller supplies. By class, long grain domestic and residual use is projected at 100.0 million cwt, down 8.0 million cwt from the previous forecast and nearly 6 percent smaller than a year earlier.

Combined medium- and short-grain domestic and residual use is projected at 33.0 million cwt, up 1.0 million cwt from the previous forecast—based on larger supplies—and nearly 14 percent above a year earlier.

Total U.S. rice exports in 2019/20 are projected at 100.0 million cwt, down 1.0 million cwt from the previous forecast but up 11 percent from the year-earlier revised level. By class, long-grain exports are projected at 70.0 million cwt, down 2.0 million cwt from the previous forecast but up 9 percent from the 2018/19 revised level. The downward revision was based on smaller supplies and slightly higher prices. On an annual basis, some of the increase is the result of sales made in 2018/19 that will be shipped in the 2019/20 market year.

In addition, in 2019/20, the United States is expected to regain some market share in Mexico, Central America, and northern South America with more competitive prices than South American exporters who are expected to harvest smaller crops. In recent years, the United States has lost market share in each of these core markets to more competitively priced South American exporters.

The United States is expected to increase sales in the Caribbean as well, especially to Haiti. Latin America is the largest market for U.S. long-grain rice, typically accounting for 75 percent of total shipments. Canada and the Middle East account for most of the remaining U.S. long-grain exports, with Sub-Saharan Africa taking a much smaller amount and with food aid a major component.

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Combined medium- and short-grain 2019/20 U.S. rice exports are projected at 30.0 million cwt, up 1.0 million cwt from the previous forecast and more than 15 percent larger than a year earlier. Both this month’s upward revision and year-to-year increase are largely based on a rollover of sales—mostly to Northeast Asia—made in 2018/19 that will be shipped in 2019/20. Sales to Northeast Asia account for the majority of U.S. medium- and short-grain exports, with California supplying virtually all U.S. shipments to the region.

Both California and the Southern States ship rice to the Mediterranean. Until 2017/18, Turkey was a regular buyer of U.S. medium- and short-grain rice in large volumes but has purchased very little since because of the imposition of additional tariffs on imports.

U.S. 2019/20 rough-rice exports remain projected at 38.0 million cwt, up 15 percent from this year. Long-grain rice accounts for nearly all the expected increase in U.S. rough-rice exports in 2019/20, with Latin America accounting for nearly all of the long-grain rough-rice shipments and expected increase.

Smaller amounts of medium- and short-grain rough-rice exports are typically shipped to the North Africa and the Middle East, with Libya an erratic buyer. Turkey, once a regular buyer of U.S. medium- and short-grain rough rice through spring 2017, is not expected to return in 2019/20.

In 2019/20, U.S. milled rice exports (combined milled and brown rice exports on a rough-rice basis) are projected at 62.0 million cwt, down 1.0 million from the previous forecast but up 9 percent from this year. Northeast Asia is the largest market for U.S. milled rice, taking almost exclusively medium- and short-grain varieties from California. Haiti is the largest market for U.S. long-grain milled rice exports, with sales expected to rebound from recent sluggishness caused by civil disorder in Haiti. The United States supplies nearly all of Haiti’s rice imports.

Canada is a regular buyer of U.S. milled rice, taking mostly long-grain rice but some medium- and short-grain rice as well. Colombia imports both milled and rough rice from the U.S. Although Mexico is primarily a rough-rice market, the country regularly imports much smaller amounts of U.S. milled rice. The Dominican Republic regularly purchases milled rice from the United States, although the country is a small importer.

Except for Libya and Turkey, North Africa and the Middle East are milled-rice markets, with Iraq and Saudi Arabia currently the largest buyers of U.S. rice in the region, taking only long grain rice. U.S. prices are currently quite competitive with South American exporters in the Middle East long-grain milled rice markets. Jordan is a regular importer of U.S. medium- and short-grain milled rice.

U.S. Ending Stocks Forecast for 2019/20 Lowered; Season-Average Farm Prices Raised

In 2019/20, U.S. rice ending stocks are projected at 51.6 million cwt, down 12 percent from the previous forecast and 10 percent below a year earlier. The substantial downward revision was largely due to a much smaller crop more than offsetting reduced use. Despite the downwad revision, these are the second largest U.S. ending stocks since 1985/86.

By class, U.S. 2019/20 long-grain ending stocks are projected at 30.3 million cwt, down 20 percent from the previous forecast and 19 percent below 2018/19. The long-grain ending stocks-to-use ratio is estimated at 17.8 percent, down from 21.9 percent a year earlier.

Combined medium- and short-grain 2019/20 ending stocks are projected at 19.9 million cwt, up 0.4 million cwt from the previous forecast and 7 percent larger than a year earlier. The medium- and short-grain stocks-to-use ratio is forecast at 31.6 percent, down 33.8 percent a year earlier.

The U.S. season-average farm price (SAFP) for long-grain rice is projected at $10.50 per cwt, up 50 cents from the previous forecast but 20 cents below the 2018/19 SAFP. The upward revision was based on the substantially reduced supply forecast. The continued year-to-year decline is based on the extremely large carryin.

The Southern medium- and short-grain SAFP is projected at $11.00 per cwt, up 50 cents from the previous forecast but down $1.20 from a year earlier. The upward revision was mostly based on a higher long-grain SAFP forecast in 2019/20.

The California medium- and short-grain 2019/20 SAFP is projected at $17.00 per cwt, up 50 cents from the previous forecast but down 80 cents from 2018/19. The upward revision was based on higher-than-expected monthly reported cash prices in recent months.

The continued year-to-year decline is based on larger supplies and strong competition in the global market from China. China has taken much of Egypt’s former export market as well as some of Australia’s former market as both of these medium- and short-grain exporters have sharply reduced shipments because of tight supplies.

The U.S. medium- and short-grain SAFP is projected at $15.10 per cwt, up 50 cents from the previous forecast but down $1.00 from a year earlier. The U.S. 2019/20 all-rice SAFP is projected at $11.70 per cwt, also up 50 cents from the previous forecast but down 30 cents from 2018/19.

U.S. 2018/19 Export Forecast Lowered; Imports Raised

There were several revisions to the U.S. 2018/19 rice balance sheet this month, with the largest revisions on the use side. On the supply side, the 2018/19 all-rice import forecast was raised 0.7 million cwt to 28.7 million cwt, with medium- and short-grain accounting for all of the upward revision. In April, a third 21,000-ton shipment of rice arrived in Puerto Rico from China, following shipments in September and December.

The current 2018/19 medium- and short-grain import forecast of 5.7 million cwt assumes no additional large shipment of rice from China in 2018/19. Long-grain imports remain projected at 23.0 million. Through April 2019, long-grain shipments from Thailand, India, and Vietnam were behind a year earlier’s pace, while shipments from Brazil were ahead. Brazil exports mostly broken kernels of rice to the U.S. for use in processed products. Shipments from Pakistan are about the same a year earlier. The Asian suppliers ship mostly aromatic rice to the United States.

On the 2018/19 U.S. export side, total exports were lowered 3.0 million cwt to 90.0 million cwt based on a continued slow pace of shipments through May. Long-grain exports were lowered 2.0 million cwt to 64.0 million cwt. There have been no sales yet this year to former top buyer Venezuela and sales, and shipments to Haiti remain behind a year earlier. However, shipments and sales to Mexico, Nicaragua, and Costa Rica are well ahead of a year earlier. Similar to 2018/19, sales and shipments to Sub-Saharan Africa remain small with little growth expected.

To reach this revised export forecast, the pace of long-grain U.S. shipments will need to substantially increase. A major factor supporting a stronger pace of shipments the remaining 3 months of the 2018/19 market year is the high level of outstanding sales to certain key long-grain markets.

For the week ending May 30, number-one U.S. long-grain buyer Mexico had almost 107,000 tons of outstanding long-grain rice purchases on the books—almost all rough rice—up from about 77,000 a year earlier. Nicaragua’s outstanding sales as of May 30 were 37,900 tons, well above just 200 tons a year earlier. U.S. shipments to Nicaragua are currently the highest since 2012/13.

By type, 2018/19 milled-rice exports are forecast at 57.0 million cwt, down 3.0 million cwt from the previous forecast and 2.5 percent smaller than a year earlier. It is expected that much of the recent 120,000-ton sale to Iraq will ship in 2019/20.

Rough-rice exports remain forecast at 33.0 million cwt, up 15.5 percent from a year earlier, with Mexico and Central America accounting for nearly all of the year-to-year increase. Shipments to Venezuela are down sharply from a year earlier outstanding sales on the books. Venezuela was a major buyer of U.S. long-grain rough-rice from 2007/18-2016/17. Purchases by Venezuela dropped substantially in 2017/18 and have been very small since then.

On balance, these supply and use revisions resulted in a 3.7-million cwt increase in the ending stocks forecast to 57.3 million cwt, up 95 percent from a year earlier and the highest since 1985/86 record. The long-grain ending stocks forecast was raised 2.0 million cwt to 37.3 million cwt, 8 percent above a year earlier and also highest since 1985/86. The combined medium- and short-grain 2018/19 ending stocks forecast was raised 1.7 million cwt to 18.6 million cwt, up almost 145 percent from a year earlier.

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