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Rice producers, governments watch expanding production

USDA's latest rice supply and demand report confirmed what the market has been telling us: global rice producers and governments are focused on expanding production. 2004-05 global production is estimated by USDA to be up 18.6 million milled metric tons — 4.8 percent over the last production period. U.S. production is estimated at 7 million metric tons.

Domestic and foreign rice producers are responding to improving rice prices, which are being driven by strong global economic conditions.

With rice consumption exceeding production, China, India, and many other governments are taking steps to assure adequate rice supplies.

For the 2004 marketing period, USDA projects U.S. rice producers will expand production 12 percent over 2003-04 and foreign producers will expand production 4.7 percent — 17.9 million metric tons.

2004 U.S. long grain production is estimated by USDA to be up 10 percent. Medium grain and short grain production is estimated to be up 17.8 percent over 2003.

USDA projects ending stocks of all U.S. rice at 27.7 million hundredweight, 16.4 percent above 2003-04; long grain stocks 9.4 percent above 2003-04, and medium and short grain stocks 33 percent above 2003-04.

USDA lowered its 2004-05 season-average farm price by $2 per hundredweight on each end to $6.25 to $6.75 per hundredweight, compared to $7.45 per hundredweight for 2003-04. The price is being driven lower by expectations of weaker global prices and a narrowing of the price premium between U.S. and major competitors.

On the international side USDA indicates world prices continued to soften in July as demand eased with China's continued absence from the market. Thai 100B is quoted at $230 per ton, FOB, off $5 the last month. Viet prices have weakened as supplies increased with the summer-autumn crop. Viet 5 percent is quoted at $228 per ton, FOB, down $3 through the month.

On the domestic side USDA says that with U.S. #2/4 long grain milled rice currently at $406 per ton, FOB, the spread between U.S. and Thai prices has narrowed to $176 per ton, compared to $193 last month. Price quotes for U.S. #1/4 medium grain milled rice from California are $430 per ton, bulk, ex-spout Sacramento.

A U.S. and global rice slide show is available on the Internet at http://www.aragriculture.org/agfoodpolicy/ricesitol/slides/Delta_Farm_Press_Graphics_071404.pdf.


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

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