If U.S. long grain rice producers can limit production to the March 29, 2018, USDA Planting Intentions Report, this should be a reasonably good year for our long grain rice producers. If a new demand source emerges and/or global rice production is off due to a weather event or some other anomaly, it could be a very profitable year if current planting intention are not exceeded.

 The Bottom Line

Long Grain USDA Supply and Demand Estimates

 World Rice USDA Supply and Demand Estimates

 Long Grain Rice Price Outlook

The U.S. long grain rice price for the 2015 crop averaged around $11.20 per cwt or $5.04 per bushel; 2016 crop $9.61 per cwt. or $4.32 per bushel; and presently the 2017 crop is estimated at $11.70 per cwt. or $5.27 per bushel.

The average price the long grain rice producer receives for their 2018 production will be a function of several factors, with 2018 long grain planted acreage presently at the top of the list. The March 29, 2018, USDA planting intentions report indicated Arkansas long grain rice producers will expand acreage by 16 percent to 1,150,000 acres from 995,000 acres in 2017. U.S. long grain rice producers are expected to expand acreage by 12 percent to 2,030,000 acres from 1,811,000 acres in 2017.

If these long grain rice acreage estimates stand, then all things equal, one would expect the 2018 farm price will be below the current estimate for the 2017 average crop price of $5.27 per bushel.

 If one assumes current demand for the remaining 2017 marketing period, which runs through July 31, 2018, and no new demand source at current price levels, a reasonable price consideration would be around $10.55 per cwt. or $4.74 per bushel for the 2018 average rice price.

What is the potential for long grain rice prices to improve by year’s end?

First, that will be a key function of final U.S. long grain planted acres, with next key USDA estimate the end of June. Additional immediate soybean price weakness could easily grow U.S. long grain planted acreage by an additional 100,000 plus acres. Assuming current U.S. long grain rice planting intentions materialize, no major global weather events emerge, and no new demand source materializes, the $4.74 per bushel figure is reasonable.

Overplanting U.S. long grain rice in 2018 would be a key factor in price weakness. Expanding acreage beyond current March 2018 planting intentions would likely further depress long grain rice prices. 

Trade War?

The U.S. does not export rice to China, and when and if we do sometime in the future, the rice will likely be very high quality rice.

Presently, from a trade war perspective with China, we have always had trade challenges and probably always will; the past trade discussions have not been as public as the current verbal exchanges. From the U.S. ag sector perspective, certainly one must be concerned about damaging demand for our ag products with soybeans being a key concern. Also, a key worry for U.S. long grain rice prices related to trade war considerations is the impact on soybean and corn prices. Grain price weakness in general tends to place downward pressure on rice prices.

From a big picture perspective: on one hand, Brazil, Russia, India and China, the BRIC countries (also include South Africa), would like to be as self-sufficient as possible. On the other hand, the United States and China have much to gain by a mutually respectful working relationship. That said, it’s hard to see a truly fair trade and/or respectful relationship emerging anytime soon, which is why these public verbal exchanges have emerged.

 Also of Interest

See recent rice webinar videos https://bit.ly/2E2BEla include:

 Bobby Coats is a professor in the Department of Agricultural Economics and Agribusiness, University of Arkansas System, Division of Agriculture, Cooperative Extension Service. E-mail: [email protected].

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