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Rice Outlook Summary (RCS-16I, Sept. 14, 2016)

Core Content

This report provides an overview of the U.S. and global rice production, supply, use, and price forecasts for the 2016/17 marketing year. It includes updates to the Rice Chart Gallery and outlines the implications of recent changes in production and trade dynamics.

U.S. 2016/17 Production Forecast

• Total Production Forecast: Reduced by 3% to 237.1 million cwt, the second highest on record.
• Harvested Area: Forecast at 3.13 million acres, up 23% from the previous year and the highest since 2010/11.
• Yield: Average yield of 7,590 pounds per acre, 90 pounds below the previous forecast but 1% higher than the previous year.
• By Class:
  • Long-grain: Forecast at 177.9 million cwt, up 34% from a year earlier.
  • Medium- and short-grain: Forecast at 59.3 million cwt, nearly unchanged from the previous year.

U.S. 2016/17 Supply and Use

• Total Supply Forecast: 307.1 million cwt, the highest on record, up 16% from the previous year.
• Domestic and Residual Use: Forecast at 133.0 million cwt, down 5 million cwt from the previous forecast but up 20% from a year earlier.
• Exports: Forecast at 115.0 million cwt, up 7% from the previous year and second highest on record.
• By Class:
  • Long-grain Exports: Forecast at 81.0 million cwt, up 6% from the previous year.
  • Medium- and short-grain Exports: Forecast at 34.0 million cwt, up 9% from the previous year.
• Ending Stocks: Forecast at 59.1 million cwt, the highest since 1985/86, with a stocks-to-use ratio of 23.8%, the highest since 1992/93.

U.S. 2016/17 Farm Price Forecasts

• Season-Average Farm Price (SAFP): Forecast at $10.20–$11.20 per cwt, down 20 cents from the previous month and below the 2015/16 revised price of $12.20.
• Long-grain SAFP: Forecast at $9.20–$10.20 per cwt, down 30 cents from the previous month and $1.40 below the 2015/16 revised price of $11.10.
• California Medium- and Short-grain SAFP: Forecast at $14.50–$15.50 per cwt, unchanged from the previous forecast but well below the 2015/16 revised price of $18.10.
• Southern Medium- and Short-grain SAFP: Forecast at $9.70–$10.70 per cwt, down 30 cents from the previous month and below $11.30 from a year earlier.
• U.S. Medium- and Short-grain SAFP: Forecast at $13.00–$14.00 per cwt, down 10 cents from the previous forecast and the lowest since 2006/07.
• July 2016 Cash Prices:
  • Long-grain: $10.70 per cwt, up 10 cents from June.
  • Medium- and short-grain: $14.60 per cwt, up 70 cents from June.
  • California: $17.30 per cwt, down 20 cents from June and $2.90 below the start of the 2015/16 market year.
  • South: $10.10 per cwt, down 40 cents from June and $2.80 below August 2015 levels.

Global Outlook

• Global Production Forecast: Raised to 481.7 million tons, a record high, up 0.6 million tons from the previous forecast and 2.9 million tons from the 2015/16 level.
• Global Ending Stocks: Forecast at 115.6 million tons, up 1.8 million tons from the previous forecast.
• Global Trade: Projected to decline for the third consecutive year due to weaker demand.
• Export Forecasts:
  • India: Raised to 55.0 million tons, becoming the number one global exporter since 2012.
  • Vietnam and U.S.: Export forecasts were lowered due to reduced area and yield estimates.
• Trading Prices: Continued to decline in Thailand, the U.S., and Vietnam.

Regional Production Revisions

• India: Raised production forecast by 1.5 million tons to 106.5 million tons, due to increased area and yield.
• Dominican Republic: Raised by 50,000 tons to 550,000 tons.
• Uruguay: Raised by 31,000 tons to 931,000 tons.
• Vietnam: Lowered by 700,000 tons to 27.8 million tons, due to lower area and yield estimates.
• U.S.: Lowered by 228,000 tons to 7.53 million tons, but still up 23% from a year earlier.

Crop Conditions

• Harvest Progress:

  • As of September 11, 50% of the U.S. rice crop was harvested, up from 41% a year earlier.
  • Texas: 96% harvested, ahead of both the previous year and 5-year average.
  • Louisiana: 84% harvested, but 40% of the crop was in poor or very poor condition after historic rains began on August 12.
  • Arkansas: 52% harvested, well ahead of the previous year and 5-year average.
  • California: 4% harvested, slightly behind the previous year but unchanged from the 5-year average.

• Crop Condition Ratings:

  • 17% of the U.S. crop rated in poor or very poor condition, up from 8% in early August.
  • Louisiana: 17% poor/very poor, down from 5% in early August.
  • Arkansas: 28% poor/very poor, up sharply from 11% in early August.
  • Texas: 7% poor/very poor, unchanged from early August.
  • Mississippi: 2% poor/very poor, down from 4% a year earlier.
  • Missouri: 4% poor/very poor, unchanged from both a month and a year earlier.
  • California: 80% in good or excellent condition, down 5 percentage points from the previous week but well above the previous year.

Key Factors Affecting U.S. Production

• Area and Yield Revisions: Reduced area and yield in the South due to heavy rains and flooding, especially in Louisiana and Mississippi.
• Expansion in Missouri and Texas: Increased area due to lack of more profitable alternatives and return to normal weather.
• California: Increased harvested area due to relaxed water restrictions, but still under drought.

Summary of Key Trends

• U.S. rice production and supply are projected to reach record levels, but prices are expected to decline due to high stocks.
• India is emerging as the top global rice exporter, while Vietnam and the U.S. saw reduced forecasts.
• Global trade is expected to decline for the third year in a row, driven by weaker demand.
• U.S. exports are forecast to increase, with a focus on expanding into new markets such as Sub-Saharan Africa and the Middle East.
• Crop conditions in the South have deteriorated significantly due to heavy rains, while conditions in Texas and Mississippi remain relatively favorable.