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Summary of the Rice Outlook (RCS-16F, June 14, 2016)

Core Content

This report provides an overview of the U.S. and global rice market outlook for the 2016/17 season, highlighting production, supply, price forecasts, trade dynamics, and ending stocks. It also includes a review of the 2015/16 season's revisions.

Main Points

U.S. Domestic Outlook

• Crop Progress: The 2016/17 U.S. rice crop is progressing ahead of normal in most regions, with the exception of California, where progress is behind the previous year.
• Crop Conditions: Southern states like Arkansas and Louisiana have seen a decline in the percentage of rice in good or excellent condition due to heavy spring rains and flooding, while California's conditions are favorable.
• Supply Forecast: Total U.S. rice supply for 2016/17 is projected at 297.9 million cwt, a near-record level, driven by increased long-grain production.
• Production Increase: U.S. rice production is expected at 231.0 million cwt, the highest since 2010/11, due to a larger planting area and slightly higher yields.
• Ending Stocks: U.S. ending stocks are projected at 50.9 million cwt, the highest in three decades, due to increased supplies and relatively stable use.
• Price Forecast: The U.S. long-grain season-average price is raised to $10.00–$11.00 per cwt, up 50 cents from the previous month. The overall U.S. rice price is forecast at $11.60–$12.60 per cwt, slightly lower than the previous year due to increased supply and global competitiveness.

U.S. Exports

• Export Forecast: U.S. rice exports for 2016/17 are forecast at 112.0 million cwt, down 1.0 million cwt from the previous forecast but up 11% from the previous year.
• Long-Grain Exports: Long-grain exports are projected at 81.0 million cwt, the highest since 2005/06, with Latin America as the largest market.
• Medium- and Short-Grain Exports: These are forecast at 31.0 million cwt, down 1.0 million cwt from the previous forecast, with North Africa and the Middle East as key buyers.
• Export Markets: The U.S. continues to export to the Western Hemisphere, which accounts for over 60% of total exports, with Northeast Asia as the next largest market for medium- and short-grain rice.

U.S. Imports

• Import Forecast: U.S. rice imports for 2016/17 remain at 24.0 million cwt, unchanged from the previous year.
• Long-Grain Imports: Long-grain imports are forecast at 20.5 million cwt, with Thailand accounting for over 60% of these imports.
• Medium- and Short-Grain Imports: These are forecast at 3.5 million cwt, mostly from Thailand and Italy.

Global Outlook

Production

• Global Production: Projected at a record 480.7 million tons (milled basis), up 2% from the previous year.
• Regional Highlights:
  • Southeast Asia saw a 4% increase in production.
  • South Asia is expected to increase production by over 1%.
  • East Asia is projected to harvest a record 160.9 million tons.
  • Mexico is the only country with a significant production increase, up 8% to 173,000 tons.
  • India is projected to increase its rice area by 1% to 44.0 million hectares.

Consumption

• Global Consumption: Projected at 480.4 million tons, slightly below production, leading to a small increase in ending stocks.
• China is expected to have the highest ending stocks at 68.1 million tons, up 10% from the previous year.
• U.S. Ending Stocks: Projected at 1.6 million tons, up 19% from the previous year.
• Thailand's ending stocks are forecast to decline by 47% to 3.2 million tons due to domestic sales and reduced harvest.

Trade

• Global Trade: Projected to decline for the third consecutive year to 40.6 million tons, down 2% from the previous year.
• Trade Revisions:
  • Burma's exports for 2017 were reduced by 0.1 million tons to 1.75 million tons.
  • Philippines' imports for 2016 were reduced by 0.3 million tons to 1.5 million tons.
  • Brazil's exports for 2016 were raised by 50,000 tons to 800,000 tons.

Key Information

• Ending Stocks:
  • U.S. ending stocks are at a 3-decade high.
  • Global ending stocks (excluding China) are at a 4-year low.
  • Top 7 exporters' stocks are at a 4-year low, contributing to global price strength.
• Price Trends:
  • Global rice prices are expected to remain strong due to tight supplies and increased demand.
  • U.S. long-grain prices are forecast to be the lowest since 2006/07.
• Weather Impact:
  • Heavy rains and flooding in the South affected crop conditions and ratoon crop planting.
  • California had favorable weather, supporting good crop conditions.
• El Niño Effects:
  • El Niño reduced rice production in 2015/16, especially in Latin America, Southeast Asia, and South Asia.
  • Recovery is expected in 2016/17, but stocks remain tight.

Conclusion

The 2016/17 U.S. rice season is characterized by strong production, particularly in long-grain, and increased supplies, leading to a record near-300 million cwt total supply. Despite this, ending stocks are expected to reach a 3-decade high, driven by relatively stable use and increased imports. Globally, production is at a record high, but trade is expected to decline for the third consecutive year, with tight stocks among major exporters contributing to higher global rice prices. Weather conditions in the South have had a mixed impact, with some areas facing severe flooding, while California experienced favorable conditions. The U.S. remains a key player in global rice trade, with a strong focus on long-grain exports.