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Economic Research Service Rice Outlook Summary (RCS-17J, Oct. 16, 2017)

Core Content Overview

This report provides an analysis of global and U.S. rice production, consumption, trade, and prices for the marketing year 2017/18. It highlights changes in forecasts and outlines key trends affecting the rice market.

Global Outlook

• Production: Global rice production for 2017/18 is forecast at 483.8 million tons (milled basis), slightly higher than the previous forecast but 3.3 million tons below the 2016/17 record. This is due to a 3% expansion in area by India, a low-yielding large producer.
• Consumption: Global rice consumption for 2017/18 is projected at 480.5 million tons, up 0.3 million tons from the previous forecast but 0.5 million tons below the year-earlier record.
• Ending Stocks: Global ending stocks for 2017/18 are projected to rise 15% to 141.5 million tons, the highest since 2000/01. China accounts for 65% of the global ending stocks, with its forecast increased by 17.6 million tons to 92.5 million tons.
• Trade: Global rice trade for 2018 is projected at 44.4 million tons, nearly unchanged from the previous forecast and just 0.14 million tons below the year-earlier record. Increased shipments from Australia, China, India, and Pakistan are expected to offset reduced shipments from several other countries.
• Prices: Global rice prices are expected to be stable, with a slight increase in U.S. rice prices due to a 15% drop in total supplies.

U.S. Outlook

Production

• Total Production: The U.S. 2017/18 rice crop forecast was lowered by 1.1 million cwt to 178.6 million cwt, 20% below the previous year and the smallest since 1996/97.
• Harvested Area: U.S. harvested area for 2017/18 is 2.39 million acres, down 23% from a year earlier and the smallest since 1987/88.
• Yields: Yields are forecast to be 7,469 pounds per acre, 35 pounds below the previous forecast but 3% above the previous year.
• By Class:
  • Long-grain: 126.3 million cwt, 0.8 million cwt below the previous forecast and 24% smaller than the previous year.
  • Medium- and Short-grain: 52.3 million cwt, 0.3 million cwt below the previous forecast and 9% smaller than the previous year.
• State-Level Changes:
  • Arkansas: Accounted for 61% of the U.S. harvested area decline.
  • Mississippi: Harvested 93% of its crop by October 9, ahead of the previous year.
  • California: Harvested 40% of its crop by October 9, behind the previous year.
  • Texas: Suffered from heavy rainfall and flooding from Hurricane Harvey, resulting in an 8% yield decline.

Supplies and Use

• Total Supplies: U.S. rice supplies for 2017/18 are projected at 248.8 million cwt, down 1.1 million cwt from the previous forecast and 15% below the previous year.
• Beginning Stocks: U.S. all-rice beginning stocks are forecast at 46.0 million cwt, 1% below the previous year.
• Domestic and Residual Use: Total use is projected at 221.0 million cwt, 11% below the previous year. Long-grain use is 88.0 million cwt, 12% below the previous year. Medium- and short-grain use is 27.0 million cwt, 15% below the previous year and the lowest since 1988/89.
• Exports: Total U.S. rice exports for 2017/18 are projected at 106.0 million cwt, 9% below the previous year. Long-grain exports are projected at 75.0 million cwt, down 5% from the previous year. Medium- and short-grain exports are projected at 31.0 million cwt, 18% below the previous year.
• Ending Stocks: U.S. ending stocks for 2017/18 are forecast at 27.8 million tons, 4% below the previous forecast and nearly 40% below the previous year. This is the smallest since 2003/04.
• Stocks-to-Use Ratio: The ratio is projected at 12.6%, down from 18.6% a year earlier and the lowest since 2003/04.

Prices

• Season-Average Farm Prices (SAFP): U.S. season-average farm prices are expected to be higher than the previous year for both classes of rice.
  • Long-grain: $12.00–$13.00 per cwt, up from $9.62 in 2016/17.
  • Medium- and Short-grain: $14.70–$15.70 per cwt, up from $12.80 in 2016/17.
• Monthly Prices:
  • Long-grain: August cash price reported at $10.60 per cwt, up 61 cents from July.
  • Medium- and Short-grain: July cash price reported at $13.80 per cwt, up 50 cents from the previous month.
  • California: $15.50–$16.50 per cwt, up from $13.60.
  • Southern: $12.20–$13.20 per cwt, up from $10.20.

International Outlook

Crop Forecasts

• Upward Revisions: Forecasts for Egypt and Nigeria were raised, while Bangladesh and Brazil were lowered.
• Nigeria: Crop forecast increased by 0.9 million tons to 3.65 million tons due to a larger harvested area.
• Ghana: Crop forecast increased by 129,000 tons to 519,000 tons due to larger area.
• Angola: Crop forecast increased by 15,000 tons to a record 40,000 tons.
• Bangladesh: Crop forecast lowered by 0.5 million tons to 33.0 million tons due to excessive rainfall and flooding.
• Afghanistan: Crop forecast lowered by 78,000 tons to 325,000 tons due to delayed rains and prolonged dry periods.
• North Korea: Crop forecast lowered by 50,000 tons to 1.55 million tons due to a dry spring.
• Brazil: Crop forecast lowered by 180,000 tons to 7.8 million tons due to smaller area.
• Guyana: Crop forecast lowered by 22,000 tons to 570,000 tons due to adverse weather.
• Venezuela: Crop forecast lowered by 0.2 million tons to 290,000 tons due to smaller area and production issues.

Trade and Imports

• Import Forecasts: Bangladesh and Nigeria are expected to increase their 2018 import forecasts by 200,000 and 100,000 tons, respectively.
• Major Markets:
  • U.S. Rough-rice: Mexico, northern South America, Central America, and the eastern and southern Mediterranean.
  • U.S. Milled-rice: Northeast Asia (Japan, South Korea, Taiwan), the Middle East, and Canada.
• Competitors: China, Egypt, and Australia are major competitors in the medium- and short-grain market. Egypt's exports remain constrained by government restrictions.

Key Information

• Global Ending Stocks: Increased to 141.5 million tons, the highest since 2000/01, driven by China's revised estimates.
• U.S. Ending Stocks: Declined to 27.8 million tons, the smallest since 2003/04.
• U.S. Production Decline: The 2017/18 crop is 20% smaller than the previous year, with Arkansas accounting for the majority of the decline.
• U.S. Price Trends: Prices are expected to be higher due to reduced supply and increased global competition.
• Trade Trends: U.S. exports are projected to decline due to smaller supplies and higher prices, with increased competition from Asian countries.
• Import Trends: Bangladesh and Nigeria are expected to increase imports, while some other countries, like Egypt, are projected to reduce imports.