RICE YEARBOOK September 23, 1998 September 1998, RCS-1998 Approved by the World Agricultural Outlook Board --------------------------------------------------------------------------- RICE YEARBOOK is published annually by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. This release contains only the text of the report --tables and graphics are not included. Published copies of the Yearbook are available from the ERS-NASS order desk. Call, toll-free, 1-800-999-6779 and ask for stock # RCS-1998, $21. ERS-NASS accepts MasterCard and Visa. --------------------------------------------------------------------------- Strong Prices Boost 1998 U.S. Rice Plantings Based on September yield estimates, the 1998 U.S. rice crop is forecast at 181.2 million cwt, up more than 1 percent from last year. Greater plantings more than offset a nearly 4-percent projected drop in average yield from 1997. This would be the second consecutive year of declining yields. The combined medium/short grain crop is estimated at 48.2 million cwt, down 16 percent from last year and the smallest since 1989/90. In contrast, long grain production is projected at 132.9 million cwt, up 9 percent from 1997 and second only to the 1994 record of 133.4 million cwt. U.S. 1998 rice plantings are estimated at almost 3.22 million acres, up more than 5 percent from 1997 as farm prices--especially for long grain rice--were high compared to alternative crops and historic rice prices at planting. All of the expansion in area is in the South. California plantings are down 6 percent due to relatively weak farm prices for California medium grain rice throughout 1997/98 and an extremely wet spring that hindered planting. Long grain area is estimated at more than 2.5 million acres, up 10 percent from 1997 and the largest on record. The medium grain area is projected to drop more than 9 percent to 689,000 acres, with the decline evenly split between the South and California. In the South, long grain prices were generally higher than medium grain during the 1997/98 market year. Short grain plantings are projected to rise 22 percent to 22,000 acres. Based on farmer surveys conducted in early September, the national average yield is forecast at 5,685 pounds per acre, down from 5,896 pounds a year earlier and the record 6,121 pounds in 1996. Several factors are behind the decline. First, a wet cold spring delayed plantings about 8 weeks in California, with harvest not starting until after mid-September and peaking in mid-October. Late planted rice typically has more disease, insect, and weed problems than earlier planted rice. Second, extreme heat, severe dryness, and--in some areas--drought stressed much of the southern crop, possibly lowering milling yields as well. Finally, a shift in total area from the high- yielding California rice to the lower yielding southern rice reduced average yields. Yield projections are updated monthly during the harvest season with final estimates reported in January. U.S. Stocks-to-Use Ratio Projected To Drop in 1998/99 Record domestic use and another year of relatively strong exports are expected to more than offset a larger carryin and greater crop, lowering 1998/99 (August-July) ending stocks to a projected 28.3 million cwt, down 6 percent from a year earlier. The stocks-to-use ratio is projected to drop to 14.7 percent from 16.2 percent a year earlier. All of the drop in stocks is in combined medium/short grain rice which is expected to decline 39 percent to 8.9 million cwt, the smallest since supply and use data were first reported by grain type in 1982/83. The stocks-to-use ratio for medium short/grain rice is projected at 16.2 percent, also the smallest since 1982/83. In contrast, record supplies are behind a 28-percent increase in long grain stocks to 18.4 million cwt, the largest since 1992/93. The long grain stocks-to-use ratio is projected to rise to 13.3 percent, up more than 2 percentage points from a year earlier, as record supplies more than offset larger total use. On a marketing year basis, 1998/99 U.S. rice exports are projected at 84 million cwt, unchanged from a year earlier. Rough rice exports-- with Latin America accounting for the bulk of shipments--are projected to drop only slightly to 24 million cwt from the 1997/98 record of 26 million. Milled exports are projected to rise 2 million cwt to 60 million, the first increase since 1994/95. The U.S. season-average farm price is projected to be $9 to $10 per cwt in 1998/99, compared with $9.64 in 1997/98 and $9.96 in 1996/97. The 1996/97 season-average price was the highest since the 1980/81 record of $12.80. U.S. season-average farm prices have exceeded $9 per cwt since 1995/96. While monthly cash prices have generally declined since late 1997, they have nonetheless remained high. U.S. monthly cash prices have remained above $9 per cwt for almost 3 years, the longest period of sustained strong rice prices since the late 1970s and early 1980s. In contrast to relatively strong farm prices during 1997/98, prices for U.S. long grain milled rice have declined for over a year. Lack of any price strength in this market is largely due to an already large premium over the Thai price (which has faced substantial downward pressure due to the baht's devaluation), a steady decline in U.S. milled rice exports since 1995/96, and expectations of record U.S. long grain supplies in 1998/99. In contrast, prices for California medium grain milled rice, which showed no strength during the first 10 months of 1997/98 have risen several times since June and are currently the highest since early 1997. The current price strength is largely due to expectations of a much smaller 1998/99 California crop and near steady domestic use and exports. World Rice Supplies To Tighten in 1998/99 World rice production is projected at 378.7 million tons (milled basis) in 1998/99, down nearly 2 percent from the 1997/98 record. Smaller projected crops in several Asian countries--most importantly China, India, South Korea, and Japan--account for the smaller production. World consumption is projected at 387.1 tons, a record and up nearly 1 percent. With consumption exceeding production, ending stocks are projected to plunge 16 percent to 44.3 million tons, the lowest since 1982/83. Substantially smaller global stocks and record use result in a projected stocks-to-use ratio of just 11.5 percent, down from 13.8 percent a year earlier, and the lowest since 1972/73. World trade is projected at 20.1 million tons in 1999. While down more than 15 percent from the record 23.85 million tons projected for this year, trade would still be the third highest on record. The decline is primarily due to expectations of normal weather in Southeast Asia and Latin America, and smaller crops in several major Asian exporting countries. This year's record trade is largely due to weather-related difficulties in key rice consuming countries--most importantly Indonesia, the Philippines, Brazil, and Bangladesh--that led to record import demand. In contrast, supplies in major Asian exporting countries were record high in 1998. This issue of the Rice Situation and Outlook Yearbook contains two special articles. The first article outlines how El Nino caused record world rice trade in 1998. The second explains why U.S. rough rice exports were record high in 1997/98. For more information, contact Nathan Childs (202) 694-5292. Printed copies of the Rice Situation and Outlook Yearbook will be available in about 2 weeks. END_OF_FILE