Rice Outlook: U.S. Supplies Forecast 7% Smaller Than Last Year

Rice harvest. ©Debra L Ferguson Stock Photography

The 2019/20 U.S. rice production forecast was lowered 0.7 million cwt this month to 187.9 million based on a lower yield. Beginning stocks and imports were unchanged. The smaller crop lowered total supplies to 262.4 million cwt, 7 percent below a year earlier. There were no revisions on the use side of the U.S. 2019/20 rice balance sheet.

With slightly smaller supplies, the 2019/20 U.S. ending stocks forecast was lowered to 36.4 million cwt, 19 percent below a year earlier. The 2019/20 season-average farm price projections are unchanged from last month. The 2019/20 global production forecast of 497.8 million metric tons is nearly unchanged from October, as upward revisions almost offset reductions.

Crop projections were lowered for Indonesia and the Philippines, but raised for India. The 2019/20 global ending stocks forecast was raised 2.0 million tons to a record 177.0 million, the 13th consecutive year of increasing stocks. Global rice trade is projected to increase 3 percent in 2020, with China, India, Thailand, and the United States expected to expand exports. Thailand and Vietnam’s trading prices for regular milled white rice are unchanged from last month, while U.S. price rose slightly.

Domestic Outlook

U.S. 2019/20 Rice Crop Forecast Lowered to 187.9 Million Cwt

The only supply-side revision to the 2019/20 U.S. rice balance sheet was a 0.7-million cwt reduction in the production forecast to 187.9 million cwt, down 16 percent from a year earlier. This month’s reduction in the crop forecast was due to a slightly lower yield forecast reported by NASS in the November Crop Production report.

At 7,587 pounds per acre, the 2019/20 U.S. average yield is down 29 pounds from the previous forecast and 104 pounds below a year earlier. Yields were lowered slightly this month for both Louisiana and California. U.S. 2019/20 harvested area remains estimated at 2.48 million acres, 15 percent below a year earlier.

By class, the 2019/20 U.S. long-grain production forecast was lowered 0.5 million to 127.1 million cwt, down 22.5 percent from a year earlier. This substantial reduction in the long-grain crop is primarily due to lower area largely resulting from persistent and heavy rainfall during most of the planting season in much of the South—especially in the Delta.

Nearly all U.S. long-grain rice is grown in the South, with the Delta the largest producing region. The 2019/20 combined U.S. medium- and short-grain production forecast was lowered 0.2 million cwt to 60.9 million cwt, up 1 percent from a year earlier.

Harvested area in 2019/20 is estimated to be lower than a year earlier in all reported rice producing States, with Arkansas accounting for 69 percent of the 438,000-acre decline. At 1.13 million acres, rice harvested area in Arkansas is estimated to be 21 percent below a year earlier. Yields are anticipated to be below 2018/19 in all reported States except California and Mississippi, where yields are projected up 1 percent and unchanged in those States, respectively.

Louisiana’s yields are projected to drop the most in 2019/20, projected down more than 7 percent from the previous year. The Arkansas 2019/20 yield is projected to be down just 20 pounds per acre from a year earlier. Rice production in 2019/20 is projected to be smaller than a year earlier in all reported U.S. rice producing States, with Arkansas accounting for 64 percent of the 36.3-million cwt projected U.S. decline. Production is projected to drop 21-24 percent in Arkansas, Missouri, and Texas, 12-17 percent in Louisiana and Mississippi, and just 1 percent in California.

Except for small areas in the upper Delta, harvest of the 2019/20 spring-planted rice crop is virtually complete across most of the South. In Southwest Louisiana and Texas, harvest of the ratoon crop—a partial second crop harvest from the stubble remaining in the field after the harvest of the main crop—continues. The impact on yields and quality on the unharvested rice in the South by the recent abnormally cold weather—including frost in some areas—is unknown.

Although planting in California was delayed by an unusually cold and wet late-May, conditions during the summer were quite favorable for producing rice, with the harvest pace slightly ahead of normal by late October. Except for small areas of late-planted rice, harvest of the 2019/20 California rice crop is virtually complete.

U.S. 2019/20 Total Rice Supplies Projected To Be 7 Percent Smaller than a Year Earlier

The forecasts for beginning stocks and imports were not revised this month. Beginning stocks for 2019/20 remain estimated at 44.9 million cwt, 53 percent larger than a year earlier. Long-grain beginning stocks remain estimated at 32.6 million cwt, more than 60 percent higher than a year earlier. Combined medium- and short-grain beginning stocks remain estimated at 10.2 million cwt, up 34 percent from a year earlier. Stocks of brokens—not reported by length of grain—remain estimated at 2.1 million cwt, up 46 percent from a year earlier.

The 2019/20 U.S. all-rice import forecast remains at a record 29.6 million cwt, up 2 percent from a year earlier. Through September 2019, total imports on a product-weight basis were reported at 164,800 tons, up 21 percent from a year earlier. Long-grain imports in 2019/20 remain forecast at a record 24.0 million cwt, up 2.5 percent from a year earlier. Aromatic varieties from Thailand, India, Pakistan, and Vietnam are expected to account for the bulk of U.S. long-grain rice imports in 2019/20.

Through September 2019, the U.S. imported 123,898 tons of long-grain rice, up 25 percent from September 2018, with jasmine rice from Thailand accounting for most of the increase. Imports of basmati rice from India and Pakistan were also larger than a year earlier through September.

U.S. medium- and short-grain imports remain forecast at 5.6 million cwt, fractionally above a year earlier. The medium- and short-grain import forecast assumes continued large purchases by Puerto Rico of rice from China in 2019/20. In 2018/19, Puerto Rico made three purchases of around 21,000 tons of rice from China. Through September 2019, the U.S. imported 40,901 tons of medium- and short-grain rice, up 9.4 percent from a year earlier.

China, Thailand, and India are currently the largest suppliers of medium- and short-grain rice to the United States, with China now the largest supplier. In September 2019, Puerto Rico imported almost 21,000 tons of medium- and short-grain rice from China—the first shipment in 2019/20—and about the same amount as imported in September 2018. Shipments through September 2019 from both Thailand and India were higher than a year earlier.

In total, the November production revision resulted in a 0.7-million cwt decrease in the 2019/20 total U.S. supply forecast to 262.4 million cwt, 7 percent below a year earlier. The long-grain 2019/20 total supply forecast was decreased 0.5 million cwt to 183.7 million cwt, almost 12 percent below a year earlier—a result of a much smaller crop. The medium- and short-grain supply forecast was reduced 0.2 million cwt to 76.7 million cwt, up 5 percent from a 2018/19—mostly due to a large carryin.

U.S. Medium- and Short-Grain Exports Are Projected To Increase 4 Percent in 2019/20

There were no revisions this month on the use side forecasts of the 2019/20 U.S. rice balance sheet. Total domestic and residual use for 2019/20 remains at 131.0 million cwt, 9 percent below a year earlier and the smallest since 2015/16. Long-grain domestic and residual use in 2019/20 remains forecast at 98.0 million cwt, more than 10 percent smaller than a year earlier. The substantial projected decline in long-grain domestic and residual use from the previous year is based on much smaller supplies.

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Medium- and short-grain domestic and residual use in 2019/20 remains forecast at 33.0 million cwt, 5 percent below a year earlier. The current forecast for medium- and short-grain domestic and residual use is nearly equal to the recent 5-year average.

All-rice exports for 2019/20 remain forecast at 95.0 million cwt, just 1.5 percent above a year earlier. Long-grain exports in 2019/20 remain forecast at 66.0 million cwt, nearly unchanged from a year earlier, despite an abnormally large carryover of outstanding sales from 2018/19. Mexico, Iraq, and Haiti account for the bulk of the abnormally large carryover of long-grain sales at the start of the 2019/20 market year.

Latin America is projected to remain the top market for U.S. long-grain rice in 2019/20. The Middle East and Canada are projected to account for most of the remaining U.S. long-grain exports, with sales to Sub-Saharan Africa expected to remain small.

Through October 31, 2019, total commitments (sum of accumulated exports and outstanding sales) of long-grain rice to Mexico were reported in the weekly U.S. Export Sales at 416,600 tons, up 55 percent from a year earlier. Total commitments of long-grain rice (almost all rough-rice) to Nicaragua through October 31 were reported at 105,100 tons, up from just 800 tons a year earlier.

Once a top market for U.S. rice, Nicaragua had been purchasing an increasing share of its rice imports from lower priced suppliers from South America since 2010/11. The U.S has just returned as the number one supplier of rice to Nicaragua in 2019/20. Total commitments of long-grain rice through October 31, 2019 to Iraq of 154,000 tons are up 27 percent from a year earlier.

U.S. medium- and short-grain exports in 2019/20 remain projected at 29.0 million cwt, up 4 percent from 2018/19. A large carryin of outstanding sales to Japan from the 2018/19 market and a likely increase in sales to North Africa are behind expectations for larger exports. Northeast Asia (primarily Japan, South Korea, and Taiwan) is expected to remain the top market for U.S. medium- and short-grain exports. All imports of rice by these three countries are made as part of World Trade Organization agreements.

U.S. 2019/20 rough rice exports remain forecast at 33.0 million cwt, nearly unchanged from a year earlier. Long-grain shipments to Latin America account for the bulk of U.S. rough rice exports, with Mexico and Central America the top markets. For more than half a decade, the United States had lost market share in these markets to South American exporters, with relative prices a major factor.

In 2018/19, the United States regained some market share in Mexico and in 2019/20 it has returned as the major supplier to Nicaragua. Through October 31, 2019, total commitments of U.S. long-grain rough-rice to Mexico totaled 403,500 tons, up 66 percent from a year earlier.

Currently, Libya and Mexico are the only markets for medium- and short-grain rough rice exports. Through October 31, 2019, total commitments of U.S. medium- and short-grain rough rice to Mexico totaled 30,700 tons, up from just 5,000 tons a year earlier. Mexico is typically a small buyer of medium- and short-grain rough rice, with long-grain the dominant purchase.

To date, there have no U.S. sales of medium- and short-grain rough rice to Libya in the 2019/20 market year. However, in 2018/19 the United States sold 41,500 tons of medium- and short-grain rough rice to Libya. Prior to 2017/18, Turkey was a regular large buyer of U.S. medium- and short-grain rough rice, but it has not made any purchases since and is not expected to return as a buyer in 2019/20.

U.S. 2019/20 milled rice exports (combined milled and brown rice exports on a milled basis) remain projected at 62.0 million cwt, 2 percent above 2018/19. Haiti and Japan—the two largest markets for U.S. milled rice—are expected to account for most of the increase in U.S. milled rice exports in 2019/20, with Japan’s increase due to carryover of sales from 2018/19. Through October 31, 2019, total commitments to Japan were reported at 205,500 tons, up 112 percent from a year earlier.

For Haiti, total commitments through October 31, 219 were reported at 175,300 tons, up almost 2 percent from a year earlier. U.S. sales to Sub-Saharan Africa are projected to remain quite small as the U.S. is not price competitive in this huge and growing market.

The larger November production forecast resulted in a 2-percent decrease in projected 2019/20 U.S. ending stocks to 36.4 million cwt, 18 percent below a year earlier. The 2019/20 stocks-to-use ratio is forecast at 16.1 percent, down from 18.9 percent a year earlier. The long-grain ending stocks forecast was lowered 0.4 million cwt to 19.7 million cwt this month, almost 40 percent smaller than a year earlier.

The long-grain stocks-to-use ratio is forecast at 12.0 percent, down from 18.6 percent in 2018/19 and the smallest since 2013/14. The medium- and short-grain ending stocks forecast was lowered 0.2 million cwt to 14.7 million cwt, up 44 percent from a year earlier. The medium- and short-grain stocks-to-use ratio is forecast at 23.6 percent, well above 16.3 percent in 2018/19.

California 2018/19 Season-Average Farm Price Raised $2.00 to $20.00 per Cwt

In October, NASS reported revised U.S. monthly cash prices and marketings for the 2018/19 market year and for August 2019. These revisions resulted in revised 2018/19 season-average farm prices (SAFP) for California medium- and short-grain, U.S. medium- and short-grain, and for all-rice. The long-grain 2018/19 SAFP remains estimated at $10.80 per cwt, down 70 cents from a year earlier.

The 2018/19 southern medium- and short-grain price remains estimated at $12.30 per cwt, up 60 cents from a year earlier. The 2018/19 California medium- and short-grain SAFP was raised $2.00 per cwt to $20.00 per cwt, still down 10 cents from 2017/18. The higher California SAFP boosted the U.S. 2018/19 medium- and short-grain SAFP $1.30 per cwt to $17.60, up 60 cents from 2017/18 due to greater marketings of California rice and a higher southern medium- and short-grain price in 2018/19.

These revisions resulted in a 30-cent increase in the 2018/19 all-rice SAFP to $12.30 per cwt, down 60 cents from a year earlier, as lower long-grain prices in 2018/19 offset the higher average U.S. medium- and short-grain price.

There were no changes to the 2019/20 SAFP forecasts this month. The 2019/20 U.S. long-grain SAFP remains at $11.80 per cwt, up $1.00 from a year earlier, a result of much tighter supplies. The 2019/20 southern medium- and short-grain SAFP remains forecast at $12.30 per cwt, unchanged from a year earlier, with little change in production projected. The California 2019/20 SAFP remains forecast at $18.50 per cwt, down $1.50 from the 2018/19 revised SAFP.

Although the 2019/20 California rice crop is projected to be down 1 percent from a year earlier, the October 1, 2019, reported California rice stocks (combined stocks of milled and rough rice on a rough basis) of 3.6 million cwt were 65 percent larger than a year earlier. The U.S. 2019/20 medium- and short-grain SAFP remains forecast at $16.50 per cwt, down $1.10 from the year-earlier revised SAFP. The 2019/20 all-rice SAFP remains forecast at $13.00 per cwt, up 70 cents from the year earlier revised SAFP.

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