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Farm & Gin Show speaker says: Global opportunities emerge for U.S. rice

A shift in the global dynamics of rice production has left the door open for improved U.S. rice exports, but it will not likely happen until domestic rice prices drop further to match global levels.

That was the estimate given by guest speaker Michael Hanthorn, vice president of Memphis-based Informa Economics, at the recent 2005 Mid-South Farm and Gin Show in Memphis, Tenn.

The economist said global marketplace conditions would work in U.S. growers' favor, if domestic prices oblige.

“The light at the end of the tunnel is about to get brighter,” he predicted.

Hanthorn noted that since the mid to late 1990s, copious rice production from China and India substantially influenced the market.

But more recently, those two nations' export production has dramatically subsided, “dropping by the wayside.”

“The situation overseas right now is very robust with respect to promoting U.S. exports, if and when we get prices here in the United States down to where we can compete with other countries,” he said.

Informa studies the rice market, placing far-range projections up to 18 months.

Historically, he said, domestic cash prices for rice typically trade for $1.60 to $1.70 above the world price.

Hanthorn said since the mid-1980s, however, there have been five or six transitional, fluxing segments recorded, whereas U.S. rice export levels have gone from being in a non-competitive period to one that is competitive. In each case, it was the U.S. price that fell to meet the global price.

He presented comparison study data, between the United States and Thailand over the past few weeks, suggesting such a transition could happen again in the near future.

While that would be welcome news to rice producers — helping to move ample rice supply — it would not come without a sacrifice: lower selling prices.

But, if the world price level remains at its current level, which all signs, he said, indicate will happen, that would cause U.S. prices to fall to a level that would return future demand.

Presently, the world price remains steady at about $6 per hundredweight, he said, and analysts predict that price level to hold steady for at least the next year.

“We still have a lot of rice in the hands of producers and farmers from the sharp drop in prices from last year, and that is an ominous sign as we move forward.”

Projections, he said, place next season's production projections to be slightly down from this year's record crop number and a slightly larger carryout number, based on current price levels.

Hanthorn said opening up new export markets, such as Iraq one day, and expanding business in traditional markets such as Latin America would provide domestic growers an economic lift.

“For next year, the key task for this market is to make sure we get down to world levels and stay there for a sustained period,” he said.


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