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Why are rice prices low with global stocks down?

With global rice stocks dangerously low (their lowest since 1983-84), why are U.S. long grain rice prices so weak? Consider the following:

  • The 2003-04 Brazilian rough rice business was climate-related, and Brazil and the rest of the Western Hemisphere have now returned to a fairly normal production routine.

  • U.S. long grain rice producers produced a record crop.

  • U.S. supply is the second largest on record at 190 million hundredweight.

  • U.S. exports are soft, although USDA projects 80 million hundredweight. If that is achieved it will be the third largest on record. Also, fewer rough rice exports are expected, increasing dependence on milled rice sales, which to date have not materialized.

  • 2004-05 ending stocks are projected to be the second highest since 1986.

  • With energy prices trending back up, the global economies demand for certain commodities remains a question.

  • Global production is rebounding.

  • Global weather remains fairly normal.

  • This is our Asian competitor's harvest season.

  • Food security and protectionism are strongly embraced by most rice-producing countries.

  • World trade, at 24.9 million metric tons, is the lowest in four years.

  • There is uncertainty about when the demand will emerge for U.S. rice due to declining global stocks. With Thai rice prices continuing to strengthen and with Thailand, Vietnam, and China expected to have tight stocks, one hopes for increased U.S. export demand.

2004 U.S. long grain rice production: In 2004 USDA data indicates that U.S. long grain producers produced a record crop of 169 million hundredweight, and for the seventh consecutive year U.S. long grain producers have increased their yields. The 2004 yield was 6,569 pounds — 146 bushels — per acre. U.S. long grain production and yields per state follows:

  • Texas: Texas long grain rice producers harvested 216,000 acres, up 21 percent over 2003, but only slightly above the average for the previous four years. Their average long grain yield was 6,750 pounds (150 bushels) per acre. Total production was 14.6 million hundredweight.

  • Arkansas: Arkansas long grain rice producers had a record production of 96.6 million hundredweight on 1.4 million acres (second-largest acreage) with an average yield of 6,900 pounds (153 bushels) per acre. This was the seventh consecutive year of improved long grain yields.

  • California: California rice producers produce mostly medium grain rice, but they did produce 7,000 acres of long grain rice in 2004 with an average yield of 7,300 pounds per acre (162 bushels per acre). Total long grain production was 511,000 hundredweight. California's largest long grain acreage was 67,000 acres, harvested in 1984.

  • Louisiana: Louisiana long grain rice producers harvested 520,000 acres, sixth largest on record and significantly above 2003 harvested acreage of 430,000 acres. Their long grain average yield was 5,360 pounds (119 bushels) per acre, their fourth largest. Total production was 28 million hundredweight, their fourth largest.

  • Mississippi: Mississippi long grain rice producers harvested their fifteenth largest acreage, an estimated 234,000 acres (the same as in 2003). They had a record yield of 6,900 pounds (153 bushels) per acre. Production was their fifth largest at 16 million hundredweight.

  • Missouri: Missouri long grain rice producers in 2004 harvested their second largest acreage of 194,000 acres. In 2001 Missouri long grain producers harvested 207,000 acres. Their 2004 average yield was a record 6,800 pounds (151 bushels) per acre — 670 pounds (15 bushels) above 2003's record of 6,130 pounds (136 bushels) per acre.

A slide show that accompanies this article is available on the Internet at

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

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