Rice Market: Acreage Projected Down 3%

    Young furrow planted rice field, pre-flood. Photo: By Dan Roach, Ext. Associate, Mississippi State University

    The key focal point for the crop markets last week was the March 31 Prospective Plantings.  Ahead of the report, the average trade estimate for U.S. rice acres was 2.465 million.

    The actual total came in very close at 2.452 million.  The rice market’s reaction to the report was neutral with September ’22 rice closing a half cent lower Thursday at $16.025.

    Total 2022 rice acreage is projected to be down 3 percent or 80,000 acres, due mostly to a 60,000-acre reduction in California medium and short grain.  At 2.45 million, this year’s total U.S. rice acreage would be the lowest since 1987.

    U.S. Rice Planted Acreage, 2021 and March 2022 Prospective Plantings.

    State:

    2021

    (1,000 acres)

    2022 (March 31)

    (1,000 acres)

    Y/Y change

    (1,000 acres)

    Arkansas 1,211 1,191 -20
    California 407 348 -59
    Louisiana 420 440 +20
    Mississippi 105 100 -5
    Missouri 199 189 -10
    Texas 190 184 -6
    U.S. 2,532 2,452 -80

    Source:  USDA NASS.

    The table below provides a look at long-grain planting intentions by state.  Given the prices for alternative crops, especially soybeans, it is surprising southern states didn’t indicate a sharper reduction in rice acres.

    Too, our 2022 rice budgets point to 45 to 50% increases in production costs over last year.  With long-grain acreage expected to be down just 27,000 acres, growers are likely taking a long-term view of the rice market.

    U.S. Long-Grain Planted Acreage, 2021 and March 2022 Prospective Plantings.

    State:

    2021

    (1,000 acres)

    2022 (March 31)

    (1,000 acres)

    Y/Y change

    (1,000 acres)

    Arkansas 1,095 1,080 -15
    California 7 8 +1
    Louisiana 380 390 +10
    Mississippi 105 100 -5
    Missouri 195 185 -10
    Texas 188 180 -8
    U.S. 1,970 1,943 -27

    Source:  USDA NASS.

    U.S. Long-Grain Supply, Demand, and Price Outlook for 2022/23

    With the March Prospective Plantings behind us now, what can we expect in terms of market direction? The short answer might be: “more of the same.”

    First and foremost, the market now has a survey-based acreage number to project 2022 production. Relying on USDA’s 2022 long-grain yield projection of 7,497 pounds from the February Ag Outlook Forum, we could expect production to come in at 142.7 or 1.9 million cwt. less than last year.

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    The slightly higher yield USDA expects in 2022 makes sense assuming normal weather. Rice production this year will shift to fields with the highest yield potential and most efficient water use. To complete the supply side of the new crop balance sheet, a carry-in of 21.4 and imports of 26 million give us a total supply that could be the tightest since 2019/20 at 190.1 million cwt.

    Lower production in 2022 and historically high U.S. rice prices point to lower exports and domestic use in the upcoming year. Using USDA February Ag Outlook as a baseline, total use for 22/23 is projected at 173 million cwt.; down 4 from 21/22. Taken in total, this leaves us with 22/23 ending stocks at 17.1 million and eerily similar to 19/20 when comparing the 9.9% stocks-to-use ratio in both marketing years.

    Obviously, there’s a full growing season ahead, but it’s apparent we could see wide trading ranges in rice over the entirety of the 22/23 marketing year. Recall the wide price ranges seen in the May and July 2020 contracts. A month before expiration, the July 2020 contract traded to $23.56 as the market tried to ration supply.

    As always, there are a lot of market unknowns, but a slight reduction (27,000 acres per the March intentions) in long-grain acreage this year could create an environment for extreme price volatility.

    U.S. Long-Grain Rice Supply and Demand.

    2019/20

    2020/21

    2021/22

    2022/23 1/

    Planted (million acres) 1.78 2.332 1.97 1.943
    Harvested (million acres) 1.73 2.301 1.94 1.904
    Yield (lbs/ac) 7261 7422 7471 7497
    Production (million cwt.) 125.6 170.8 144.6 142.7
    (million cwt.)
    Beginning Stocks 32.6 16.9 29.7 21.4
    Imports 29.8 27.4 24 26
    Total Supply 188.0 215.1 198.4 190.1
             
    Domestic Use 106.3 120.2 113 111
    Exports 64.8 65.1 64 62
    Total Use 171.1 185.3 177 173
             
    Ending Stocks 16.9 29.7 21.4 17.1
    Stocks-Use (%) 9.9% 16% 12.1% 9.9%
    Season Avg. Price ($/cwt.) $12.00 $12.60 $14.00 $15 – $23

    1/ projections based on USDA February Ag Outlook and March 2022 Prospective Plantings.




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