April 13, 2016

4 Min Read

USDA showed limited changes were made to the U.S. Rice Supply and Use Balance Sheet in its April 2016 report of supply and demand.

  • U.S. 2015-16 projected long-grain imports were lowered 500,000 hundredweight (cwt.) from 24 million cwt. to 23.5 million cwt.

  • U.S. 2015-16 U.S. long-grain rice supplies were lowered 500,000 cwt. to 179.5 million and U.S. 2015-16 U.S. long-grain rice ending stocks were lowered to 22.5 million cwt.

  • The long-grain season-average prices were lowered from $11 to $11.60 last month to $10.80 to $11.20.

  • Medium- and short-grain prices for California were lowered from $16 to $16.80 last month to $15.70 to $16.30 and the remaining states’ prices were lowered from $11.40 to $12 last month to $11.20 to $11.80.

  • USDA in its May Supply and Demand Estimates report will have its first 2016-2017 marketing period projections.

World rice: 2015-16 world rice production was lowered 0.1 percent from the March forecast to 470.6 million tons. The current world rice production forecast is down 1.7 percent from the 2014-15 estimate.

Several countries with rice production declines in the 2015-16 marketing period over the previous 2014-15 marketing period are: U.S. rice production down 14.1 percent; Brazil production down 10.2 percent; Egypt production down 11.7 percent; Cambodia production down 7.4 percent; India production down 2.4 percent; Pakistan down 2.9 percent; Philippines down 4.7 percent; and Thailand down 15.7 percent.

Global considerations: Current (2015-16) world rice beginnings stocks are down 3.5 percent over the previous 2014-15 marketing period, global production is down 1.7 percent, global trade is down 5.4 percent from 44 million tons to 41.6 million tons, and global ending stocks are down 13 percent to 90.2 million tons.

The Foreign Agricultural Service/USDA, Office of Global Analysis in its April 2016 Grain: World Markets and and Trade publication’s Rice: World Markets and Trade Section had three outstanding graphs along with a brief discussion of each graph:

1. EU Imports from Cambodia, Burma, and Guyana Rise Substantially, page 9

The graph illustrates that from 2012 to 2015, rice consumption in the European Union (EU) rose with population growth. Since the EU produces limited quantities of rice for domestic consumption the chart shows that from 2011 to 2015 the majority of their rice imports came from Thailand, India, and Pakistan.

New Import Sources Are Emerging: The chart shows that over the past four years an increasing proportion of imports have come from Cambodia and Burma, and imports from Guyana doubled last year. In 2015 the EU imported a record 1.8 million tons with almost 40 percent arriving from Cambodia, Burma, and Guyana with the trend expecting to continue in 2016.

2. Iraq Importing Less Long Grain and More Basmati Rice, page 10

Great chart and short discussion showing Iraq total rice imports have declined since 2012, but basmati (fragrant) rice has accounted for an increasing share of Iraqi imports over the past 4 years. USDA states,

  • “Combined basmati imports from India and Pakistan comprised a mere 2 percent of Iraq’s total rice imports in 2010; however, last year, Indian basmati rice alone accounted for nearly half of total imports.”

  • “The increase in basmati rice imports may suggest a shift in consumer preferences in Iraq, although a demand for non-fragrant rice imports remains.”

  • “In 2015, a U.S. supplier won a share of a tender and shipped slightly more than 60,000 tons.”

3. U.S. Export Quotes Slide, Reducing Premium Over Competitors, page 11

U.S. quotes for bulk shipments maintain a premium over South American and Asian sources at just below $450/ton.

Grain: World Markets and and Trade http://apps.fas.usda.gov/psdonline/circulars/grain.pdf

Rice: World Markets and Trade Section http://apps.fas.usda.gov/psdonline/circulars/grain-rice.pdf

Bottom Line: For the current three marketing periods, data indicate global rice consumption continues to outpace global production and global ending stocks continue to tighten having fallen from 110.6 million tons in 2012-13 to a current 2015-16 projection of 90.2 million tons.

The U.S. challenge is finding additional global long-grain rice demand for a potentially very large U.S. long-grain rice crop with planting intentions of 2.452 million long-grain acres, up 31 percent from 2015. This compares to the previous five-year average of 1.931 million long-grain acres and a previous 10-year average of 2.141 million acres.

Global macro forces are having a huge impact on the U.S. bond, equities, and commodities markets. Globally, a soft global economy, Chinese economic uncertainty, Central Banks intervention policies, to mention three, have created uncertain outcomes and volatility in the above mentioned markets including rice, cotton and grain markets.

Finally, take time to review USDA’s World Agricultural Supply and Demand Estimates Briefing Slide Showhttp://www.usda.gov/oce/commodity/wasde/Lockup.pdf.

Robert Coats is a professor in the Department of Agricultural Economics and Agribusiness, Division of Agriculture, University of Arkansas System. Email him at [email protected].

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