Despite some improvement in 2011futures prices, higher soybean prices and higher fuel and fertilizer costs may cut Arkansas’ 2011 rice acreage up to 20 percent, according to Scott Stiles, Extension economist for the University of Arkansas Division of Agriculture.
In 2010, Arkansas’ total rice acreage surged 20 percent to a decade-high 1.79 million acres. Despite a fast start and perfect harvest weather, high temperatures, weeds and insects took a toll on 2010 yields. In November, the National Agricultural Statistics Service was projecting the state average yield to be 140 bushels an acre, down 11 bushels from 2009.
"This would be the lowest state average yield since 2000, when the average yield was 136 bushels an acre," Stiles said.
Chicago Board of Trade prices for September 2011 rice futures were trading at $14.37 per hundredweight, or $6.47 a bushel just before Thanksgiving. From June 30 to early November, CBOT November 2010 rice futures contracts gained as much as 55 percent, or $5.37, per hundredweight. However, much of those gains have been undercut by a weak new crop basis.
"Initial 2011 crop basis quotes indicate net producer prices near $5.36 per bushel," said Stiles, adding "given the strength of 2011 soybean prices and other factors, Arkansas’ rice acreage will likely decline next year."
Stiles also expected 2010’s disappointing yields to affect decision making on top of fertilizer and fuel prices that trended upward since mid-summer 2010.
"The U.S. Energy Department expects diesel prices to be 8 percent higher on average in 2011. Urea prices have increased 20 percent since mid-July and are expected to remain firm, if not move higher on the prospect of 2011 U.S. corn acreage increasing by 3 to 5 million acres."
Phosphate prices have also moved higher since mid-year and potash prices were starting to move higher as well in the fall.
"These input price increases will no doubt affect all commodities," he said. "However, nutrient and fuel costs typically account for 40 percent of rice variable input costs.
"Early comments from Arkansas producers indicate that rice acres may decline 15 to 20 percent in 2011."
For more information about crop production contact your county Extension office or visit www.uaex.edu.