U.S. rice stocks highest in 30 years, USDA economist says

U.S. rice supplies are expected to climb to the highest level in three decades when the 2016-17 marketing year ends next summer, according to a forecast by the USDA's lead rice economist.

The U.S. rice industry is expected to have more rice on hand at the end of the 2016-17 marketing year than it has had since the 1980s, a development that is expected to keep rice prices depressed into the new year.

Nathan Childs, senior economist with USDA’s Economic Research Service, says a combination of a 22-percent increase in planted acreage last spring and sharply higher yields in Texas and California helped U.S. growers produce the second largest rice crop on record in 2016.

“Both U.S. exports and domestic use of rice are projected higher,” said Dr. Childs, who spoke at the USA Rice Federation’s annual Rice Outlook Conference in Memphis, Tenn. The conference, which was hosted by the rice farmers in Mississippi this year, gives the rice industry an opportunity to take stock of where it’s been and where it’s headed in the coming year.

“Despite that stronger total use, total U.S. rice ending stocks are projected to be the highest in three decades. We’re looking at just shy of 60 million hundredweight, and we haven’t had that much rice since the 1980s.”

Dr. Childs, the USDA economist who follows the rice markets, says the larger supplies are expected to result in lower season average prices for both long-grain and medium-grain rice in the 2016-17 marketing year compared to 2015-16.

Acreage expansion

As most growers know, the U.S. Rice Belt had a tremendous expansion in 2016 with the biggest increase occurring in Arkansas where acreage rose 20 percent from about 1.3 million in 2015 to 1.5 million.

“California bounced back after two years of below-normal area due to drought,” he said. “Texas had a big planting with about 190,000 acres. California was virtually back to normal at 550,000 acres. Arkansas’ was the largest since 2010. It’s not a record because 2010 was the record.”

The Texas increase resulted from the end of water restrictions in the rice area, “which held Texas back for four consecutive years,” he said. “The Texas rice area got down to as low as it was before World War I during those four years.”

A more favorable water situation in California also contributed to that state’s comeback. “There are still areas of drought in southern California, but in northern California there is more water for rice.”

The increased acreage in the Mid-South could have led to even greater production in the region but for the adverse weather conditions that occurred mainly on the west side of the Mississippi River. As a result of those high nighttime temperatures in June and July and heavy rains in

Western Delta weather

August, Arkansas’ average yield was 7,150 pounds per acre, down 2.6 percent from 2015.

Missouri’s average yield was 6,800 pounds, down 3.1 percent; Louisiana’s 6,500 pounds, down 1.3 percent; while Mississippi’s average of 7,100 pounds was unchanged from 2015, primarily because the August rains stayed on the other side of the river.

Texas growers, meanwhile, produced a record yield of 8,800 pounds per acre, according to the November National Agricultural Statistics Service. “Texas is reporting an extremely high yield for a southern state, up 27.5 percent,” says Childs. “California’s yield is up only slightly from a year ago.”

U.S. domestic consumption and residual use and exports of U.S. rice are both expected to be up in 2016-17, although neither will be a record. USDA expects domestic use to reach 133 million hundredweight and exports about 112 million.

The increased domestic use could be a result of increased residual or harvest losses or quality losses, Dr. Childs says. Domestic consumption also tends to rise when rice supplies are higher because “they just seem to move together.”

The projected 4 percent increase in exports will be mainly due to the fact U.S. prices have become more competitive in the world markets and because the U.S. simply has more rice to export.

Non-traditional markets

“A normal-sized California rice crop will also mean more supplies for medium-grain exports,” Dr. Childs noted. “The increase in medium will almost all have to be in the Middle East.

“To make that total of nearly 79 million hundredweight on long-grain rice, the U.S. will have to ship out of its traditional markets to its core buyers in the Western Hemisphere to markets such as Sub-Saharan Africa and the Middle East. And they will need to be more price competitive with Asian and South American exporters.”

U.S. long grain and medium and short grain prices have been falling in recent months with the average for long grain dropping from $11.10 to $9.70 per hundredweight with California’s medium-grain prices recording a sharp drop from nearly $20 to $13.50 per hundredweight as water supplies have improved in northern California and led to increased production.

“Global import demand is also projected to decline in 2016 and remain below record in 2017,” he said. “With crop recoveries projected in 2016-17 for Australia, South America, Thailand, India, the U.S. and Burma, we are simply going to have larger global supplies. That will mean the global carry-in could be up 1.7 percent in 2015-16.”

For more information, visit http://audioarchives.oc.usda.gov/node/29382016

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