RICE YEARBOOK -- SUMMARY November 25, 2002 November 2002, ERS-RCS-2002 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The complete report will be available electronically about 1 week following this summary release. November 25, 2002 Record Supplies, Weaker Prices Projected for 2002/03 U.S. Rice Market Total U.S. rice supplies for 2002/03 (August-July) are projected at a record 264 million hundredweight (cwt) (rough basis), up almost 4 percent from a year earlier. A 37-percent increase in beginning stocks to 39 million cwt more than offset a fractional drop in production to 212 million cwt--still the second highest on record-- and a 1-percent cut in imports to 13 million cwt. This is the second consecutive year of record total rice supplies, primarily due to bumper crops in both 2001 and 2002. U.S. rice plantings for 2002/03 are estimated at more than 3.2 million acres, down 3 percent from a year earlier. All of the acreage decline is in the South. A bearish price outlook--as well as heavy rains at plantings in parts of the Delta--are behind the decline. The average yield is projected at a record 6,611 pounds per acre, up 182 pounds from a year earlier. Increased plantings of new, higher yielding southern long grain varieties are behind this year’s third consecutive record yield. Long grain accounts for all of this year’s production decline. Long grain production in 2002/03 is projected at 157.5 million cwt, down 5 percent from a year earlier’s record, a result of weaker plantings. Nearly all U.S. long grain rice is produced in the South. In contrast, combined medium/short grain production is projected to increase 14 percent to 54.5 million cwt, primarily a result of larger plantings. At planting, medium grain prices were slightly higher than a year earlier and stronger than prices for long grain, a major factor behind expanded plantings of medium/short grain acreage this year. Last year, rice production in California--where two-thirds of the U.S. medium/short grain crop is grown--was down 12 percent from a year earlier, a main factor driving the higher medium grain prices. In the South, acreage is typically shifted among classes of rice-- i.e., long, medium, and short--based on expected returns. Higher field yields for long-grain rice made long grain more profitable to many southern producers, despite higher prices for medium-grain rice. Total use is projected at a record 225 million cwt in 2002/03, up 4 percent from a year earlier. Exports account for the majority of this year’s higher use. Total U.S. rice exports are projected at a record 100 million cwt, 6 percent above a year earlier. Competitive prices, record supplies, and expanded global trade are behind the robust U.S. export forecast. Rough rice exports for 2002/03 are projected at a record 35 million cwt, up 10 percent from a year earlier’s previous high. Combined milled and brown rice exports (on a rough basis) are projected at 65 million cwt, up 4 percent from 2001/02 and the largest since 1996/97. Total domestic use is projected at a record 125 million cwt, up almost 3 percent from a year earlier. Total ending stocks for 2002/03 are projected at 39 million cwt, unchanged from a year earlier and the largest since 1992/93. The stocks-to-use ratio is projected at 17.3 percent, down from a year earlier’s 18.1 percent. About 4 million cwt of the 2002 U.S. rice crop has been forfeited to the U.S. Department of Agriculture’s Commodity Credit Corporation (CCC), the first significant forfeiture in 8 years. Of the 4-million cwt forfeited, 1-2 million will likely be taken over by the CCC. The rest was sold earlier this year at or below market prices, a factor contributing to lower prices this year. U.S. Long Grain Supplies Projected To Rise 4 Percent to Record U.S. long grain supplies are projected at a record 193.5 million cwt, up 4 percent from a year earlier. A 130-percent increase in beginning stocks and record imports more than offset the smaller crop. At 26.8 million cwt, beginning stocks of long-grain rice are the largest since 1987/88. Long grain imports are projected at nearly 9.3 million cwt, fractionally above a year earlier. Total long grain use is projected at a record 167.7 million cwt, an increase of more than 5 percent from a year earlier. Domestic use is projected at a record 88.7 million cwt, more than 3 percent above 2001/02. Long grain exports are projected to climb more than 7 percent to 79 million cwt, second only to the 1994/95 record of 81.4 million. Long grain ending stocks are projected to drop 1 million cwt to 25.8 million cwt in 2002/03. The resulting stocks- to-use ratio is 15.4 percent, down from 16.8 a year earlier. Total supplies of combined medium/short grain rice are projected at 68.9 million cwt, nearly 3 percent above a year earlier. A 14- percent increase in production more than offset a drop in beginning stocks and weaker imports. Imports, projected at 3.8 million cwt, are down 7 percent from a year earlier’s record. Total medium/short grain use is projected to increase nearly 2 percent to 57.3 million cwt. Both domestic use and exports are projected higher in 2002/03. Medium/short grain domestic use is projected to increase more than 1 percent to 36.3 million cwt. Exports are projected to expand 2 percent to 21 million cwt. The net result is a 1-million cwt increase in ending stocks to 11.6 million cwt. The stocks-to-use ratio is projected to rise 20.3 percent, up from 18.9 percent a year earlier. The 2002/03 season-average farm price (SAFP) is projected at $3.70 to $4.00 per cwt, down from $4.17 a year earlier and the lowest since 1986/87. This is the sixth consecutive year of declining SAFP in the United States. In October 2002, quoted prices for long- grain rice were the lowest in more than 15 years, a result of record U.S. supplies and continued weak international prices. For medium/short grain rice, U.S. price quotes began to drop in July in anticipation of a larger U.S. harvest this year. By mid-November, medium grain price quotes were slightly lower than a year earlier but still higher than quotes in 2000/01 when California produced a record crop. U.S. prices for long grain milled rice are well below a year earlier. In mid-November, prices for high-quality southern long grain (U.S. No. 2, 4-percent brokens, f.o.b mill in Houston) were quoted at $198 per ton, down $22 from a year earlier. Prices were actually reported as low as $165 in June, the lowest in 15 years. The recent price strength was primarily due to tight milling capacity during the summer and early fall. Prices for California medium grain milled rice (U.S. No. 1, 4-percent brokens, f.o.b. mill in Sacramento) have been quoted at $265 per ton since mid- April, down $20 from a year earlier. Global Rice Prices Show Little Strength, Despite Smaller Supplies & Stronger Trade Since July 2002, global trading prices have dropped 5-10 percent, despite contracting supplies and expanding trade. Prices for Thailand’s 100 percent grade B have been quoted at $188-$197 per ton since early August, quite low by historical comparison. From April through July 2002, prices were reported at $200-$210 per ton. In November 2001, trading prices began to rise due to government intervention purchases by Thailand. By July 2002, prices began to drop due to record subsidized exports from India. India began subsidizing exports in the spring of 2001. Trading prices have shown little movement since early fall. During much of 2001, global trading prices had been the lowest in three decades, a result of bumper crops in most major exporting countries, and, except for parts of the Middle East, no significant production problems in a major importing country. Global rice production in 2002/03 is projected at 381.8 million tons (milled basis) down 4 percent from a year earlier and the smallest since 1996/97. This is the third consecutive year of declining global rice production. Despite the smaller crop, only modest price strengthening is expected in 2002/03, primarily due to reduced export subsidies from India. Since this forecast assumes normal weather for the remainder of the 2002/03 market year, a major weather problem could alter this projection. Global ending stocks are projected at 106.1 million tons, down 20 percent from a year earlier and the lowest since 1987/88. India and China--both major exporters--account for the bulk of this year’s expected reduction in global rice production. However, both countries are expected to have plenty of supplies for both their domestic market and to remain major exporters in 2002 and 2003. Other major exporters--Thailand, Vietnam, and the United States-- are expected to produce record or near-record crops in 2002/03. Drought reduced Pakistan’s 2001/02 and 2002/03 crops, limiting exports. Most major importers are expecting to harvest bumper crops in 2002/03. For 2003, global rice trade is projected at 26.6 million tons (milled basis), fractionally above a year earlier and second only to the 1998 record of 27.7 million tons. In 2002, global rice trade jumped 9 percent. Indonesia, Iraq, Iran, and Nigeria accounted for most of the expansion in 2003 imports. For 2003, larger imports by Brazil, Bangladesh, and the Philippines are nearly offset by weaker imports by Indonesia, Iran, and Iraq. On the export side, Thailand, Vietnam, Burma, China, and the United States are all expected to ship more rice in 2003 than this year, while India and Pakistan are expected to export less rice.