Market outlook: U.S. long grain rice supplies large

USDA's first 2005-06 rice crop projection has U.S. long grain rice beginning stocks projected at 24 million hundredweight, up 133 percent from 2004-05. U.S. long grain production is projected at a record 172 million hundredweight, 3.1 million hundredweight above last year's record of 168.9 million hundredweight.

Medium grain production is projected to decline from 61.9 million hundredweight in 2004-05 to 53 million hundredweight in 2005-06.

Total 2005-06 U.S. long grain supplies are projected at a record 207.5 million hundredweight, 17.3 million hundredweight above 2004-05, while 2005-06 medium grain total supply is estimated at 70.3 million hundredweight, which is below 77.3 million hundredweight in 2004-05.

Total U.S. all rice supplies are projected at a record 278.9 million hundredweight, 4 percent above 2004-05.

U.S. long grain 2005-06 exports are projected at 93 million hundredweight, second only to 99.3 million hundredweight in 2002-03.

U.S. long grain 2005-06 ending stocks of 23.5 million hundredweight, if achieved, would be 500,000 hundredweight below the 2004-05 level and the third highest since 1986.

U.S. medium grain 2005-06 ending stocks are projected to be the second lowest since 1982 at 8.1 million hundredweight.

USDA's U.S. all rice projected seasonal-average price range for 2005-06 is $7.20 to $7.50 per hundredweight, compared to $7.20 to $7.40 per hundredweight for 2004-05.

Global 2005-06 rice acreage is projected to be up for the third consecutive year to its second highest on record of 379 million acres.

Global 2005-06 rice production is also projected to be up for the third consecutive year at a record 410.3 million tons, up 8.3 million from 2004-05. USDA forecasts the largest increases in India, China, Bangladesh, and Thailand. During this period the United States is expected to produce 7.1 million metric tons; China, 128 million tons; India, 90 million tons; Thailand, 17.8 million tons; Bangladesh, 26.5 million tons, and Vietnam. 22.3 million tons.

Global consumption will exceed production for the fifth consecutive year at 416.6 million tons, compared to production of 410.3 million tons.

Global trade continues to be problematic with four consecutive years of declines. Global trade in 2005 is estimated at 25.1 million tons, the sixth largest on record. Record global trade of 27.8 million tons was achieved in 2001.

Of the major global exporters, Argentina, Australia, Burma, Egypt, India, Pakistan, Uruguay, and EU-25 are projected to export the same quantity in 2006 as they exported in 2005. Countries with reduced exports include Thailand 8.5 million tons in 2005 to 8 million tons in 2006 and Vietnam 4.2 million tons in 2005 to 4 million tons in 2006.

The United States is expected to export its second largest tonnage of 3.8 million tons in calendar year 2006, compared to 3.45 million tons in 2005.

On export prices, USDA makes the following points:

  • U.S. prices softened slightly from April to May, with U.S. #2/4 long grain milled rice quoted at $318 per ton, FOB, down $3. The spread between comparable qualities of Thai and U.S. rice is at a low of $16 per ton.

  • Asian prices are still showing a wide divergence between suppliers. In Thailand, prices remain high, sustained by the government intervention program, which was extended to the dry crop. Thai 100B was quoted at $302 per ton, FOB, up $1 from the previous month. However, speculation that the government is likely to begin selling intervention stocks could pressure prices.

  • Prices in Vietnam have fallen throughout May with ample exportable supplies. Viet 5 percent is quoted at $257 per ton, FOB, down $8 from the previous month. Prices in India remain unchanged; 5 percent is quoted at $265 per ton, FOB.

Ending stocks are expected to decline for the fifth consecutive year, to 68.5 million tons, 6.3 million below 2004-05, and the lowest since 1982-83. USDA points out that the majority of the decline is in China. Stocks in the rest of the world are forecast to show a minor gain for the first time in five years.

Bobby Coats is an agricultural policy analyst with the University of Arkansas.

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