U.S. rice producers could be seeing a small beam of light at the end of the tunnel when it comes to world rice supplies. But it may be too early to get your hopes up concerning the possibility of higher rice prices.
USDA is projecting record 2015-16 global rice production of 480.3 million tons (milled basis), which would be up 1 percent above 2014-15, according to Nathan Childs, senior agricultural economist with USDA’s Economic Research Service.
But it’s the numbers in the “background” that could be a sign of better times. Examples: total supplies in the 2015-16 marketing year are expected to decline for a second consecutive year due to a smaller carry-in from the 2014-15 year, and the markets are expected to see the largest consumption and residual use on record (up 1 percent from 2014-15).
Dr. Childs reported those numbers during the latest in the University of Arkansas Division of Agriculture’s Food & Agribusiness Webinar Series. To watch a video of Dr. Childs’ presentation, click on https://www.youtube.com/watch?v=BYXvUl96IxQ&t=2m24s.
U.S. rice producers are expected to harvest 152.5 million hundredweight of rice in 2015. That is down 9.5 million cwt from earlier estimates and lower than 2014’s production, according to Dr. Childs. But it is still 13.8 million cwt above the previous four-year average of 138.7 million hundredweight.
Stocks situation improving
Despite the forecast for record world production – with most of the increase coming in China, India, Southeast Asia and Bangladesh – the outlook for world rice stocks is improving from the marketer’s point of view.
“Ending stocks are projected to drop 8.5 percent to 90.5 million tons, the lowest since 2007-08,” said Dr. Childs. “India and Thailand account for most of the expected decline, which would be the third consecutive year global ending stocks of rice have fallen.”
Among the highlights from the USDA June Planting Survey and 2015-16 U.S. and Global Rice Market Outlook:
- Beginning U.S. stocks were lowered 3 million cwt to 25.6 million cwt, the fifth highest since 1988.
- U.S. Production was lowered 9.5 million cwt to 152.5 million cwt. This is below last year’s production but 13.8 million cwt above the previous four- year average of 138.7 million cwt.
- Total U.S. Supply was lowered 12.5 million cwt to 199.6 million cwt. This is identical to last year’s total supply but 17.3 million cwt above the previous four- year average of 182.3 million cwt.
- Domestic and Residual is projected to be the second highest on record but slightly lower at 100 million cwt. This is 9.8 million cwt above the four-year average of 90.2 million cwt.
- Total Exports are projected to be the eighth largest on record.
- Total Use projected to be the fourth highest on record at 176 million cwt.
- Ending Stocks down 11.5 million cwt from last month, 2 million cwt below 2014-15 estimate, but still the sixth-largest since 1987 and 1.6 million cwt above the previous four-year average.
- Average Farm Price is currently projected at $10.90 to $11.90 cwt or $4.91 to $5.36 per bushel, up 9-percent from the June estimate.
El Nino a factor
Dr. Childs said the global El Nino weather event is having a negative impact on global rice production, but the impact probably does not change near-term price action.
Dry conditions in the principal rice growing areas of Thailand led to a 4-percent cut in production to 19.0 million tons, still slightly above 2014-15, according to Dr. Childs. As a result, Thailand is expected to export 800,000 fewer tons of rice in 2015-16 for a total of 10.2 million tons.
North Korea’s crop was also lowered 6 percent to 1.6 million tons due to dry conditions in the main rice producing region, and Australia’s rice crop is projected to be smaller due to falling reservoir levels and a drop in expected planted area.
USDA raised export projections for Burma, Pakistan, and Vietnam.
Dr. Childs’ presentation can be found at http://www.uaex.edu/farm-ranch/economics-marketing/food-agribusiness-webinars/posts/07.22.15%20Childs%20JULY%202015%20WEBINAR.pdf
On Tuesday, the University of Arkansas webinar series will feature a presentation on the “Global Impacts of El Nino on Agriculture. Speakers will be Mark Brusberg, deputy chief meteorologist, and Brian Morris, senior meteorologist in the USDA Office of the Chief Economist.
To register for the webinar, which will be held at 11 a.m. central go to https://uaex.zoom.us/webinar/register/699fa1e27d8c5815d746f627e8486654
Then, on Friday, July 31, you can register for a Peanut Webinar: Peanut Market Outlook and Farm Bill Update with Nathan B. Smith – Staff Director and Extension Economist, Agricultural & Applied Economics, Center for Agribusiness and Economic Development (CAED) University of Georgia. To register for the conference, which will begin at 2 p.m., go to https://uaex.zoom.us/webinar/register/ee581737ebca74de7c24e00bf0acd2b8