Rice YEARBOOK -- TEXT December 16, 2003 Month Year, ERS-RCS-2003 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- This TEXT is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The summary was released on November 20, 2003. The complete report will be available electronically in about a month. ----------------------------------------------------------------------------- Rice Yearbook. Market and Trade Economics Division, Economic Research Service, U.S. Department of Agriculture, November 2003, RCS-2003. Contents Summary U.S. Outlook for 2003/04 Smaller Crop, Tighter Supplies Projected for 2003/04 U.S. 2003/04 Rice Exports Projected To Drop 24 Percent to 95 Million Cwt U.S. Season-Average Farm Price Projected Highest Since 1998/99 Recap of 2002/03 U.S. Rice Market U.S. Rice Exports Climb to Record 124.6 Million Cwt in 2002/03 International Outlook for 2003/04 Global Trading Price Show Little Strength; Import Demand Weaker India and the United States Are Projected To Ship Less Rice in 2004 Global Import Demand in 2004 To Decline Second Consecutive Year Report Coordinator Nathan Childs (202) 694-5292 Economic Contributors Nathan Childs (202) 694-5292 Managing Editor Martha Evans (202) 694-5118 Layout, Text Design, and Graphics Wynnice Pointer-Napper (202) 694-5130 Approved by the World Agricultural Outlook Board. Summary released November 20, 2003. The Rice Outlook and the text of the Rice Yearbook may be accessed electronically. For details, call ERS Customer Service (202) 694-5050. Rice Conversions 1 cwt = 100 pounds = 2.22 bushels = .0453 metric ton 1 metric ton = 2,204.6 pounds = 22.046 cwt = 48.992 bushels 1 cwt rough rice = .032 metric ton milled 1 metric ton milled = 31 cwt rough SUMMARY Smaller Supplies, Higher Prices Projected for 2003/04 U.S. Rice Market Total U.S. rice supplies for market year (August-July) 2003/04 are forecast at 241 million hundredweight (cwt) (rough basis), down 9 percent from a year earlier and the smallest since 2000/01. A 31- percent drop in beginning stocks and a 6-percent decline in production more than offset record imports. At 198.2 million cwt, the U.S. rice crop is down 12.7 million cwt from the year-earlier near-record. U.S. rice plantings for 2003/04 are estimated at 3 million acres, down 7 percent from a year earlier and the smallest since 1996/97. Low price expectations for long grain at planting, plus adverse weather in California are responsible for most of the decline in rice acreage this year. The average yield is projected at a record 6,656 pounds per acre, up 78 pounds from a year earlier. Increased plantings of new, higher yielding southern long grain varieties is the main factor behind this year’s fourth consecutive record yield. Long grain accounts for the bulk of the decline in total rice production in 2003/04. U.S. long grain production is projected at 146 million cwt, down 7 percent from a year earlier. Combined medium/short grain production is projected at 52.2 million cwt, a drop of 3 percent from a year earlier. Rice acreage is smaller this year in all reporting U.S. rice growing States. Louisiana accounts for the largest share of this year’s 229,000-acre decline in total rice harvested area. Field yields are projected higher this year for all reporting States except California and Texas, with record yields projected for Arkansas, Louisiana, Mississippi, and Missouri. Rice production is projected to decline this year in all reported States, with California, Louisiana, and Texas accounting for the bulk of the 12.7-million-cwt decline. The 2003/04 U.S. season-average farm price (SAFP) is projected at $7.00 to $7.50 per cwt, up from $4.22 a year earlier. This is the highest SAFP since 1998/99 and the first increase since 1996/97. A 9-percent drop in U.S. supplies, plus continued strong demand in both the U.S. and global rice markets are the main factors driving U.S. prices higher. U.S. Rice Exports Are Projected To Decline 24 Percent to 95 Million Cwt U.S. rice exports in 2003/04 are projected to drop 24 percent to 95 million cwt (rough basis). Higher U.S. prices, a much larger price difference over major Asian competitors’ prices, and smaller supplies at home are behind the bearish export forecast. Despite the expected decline, exports would still be the third highest on record. Milled rice exports are projected to account for almost all of the decline in total U.S. rice exports this year. U.S. rough rice exports for 2003/04 are projected at 42 million cwt, down just a million cwt from the year-earlier record but still the second highest on record. Mexico, Central America, and South America are expected to be the largest markets for U.S. rough rice exports in 2003/04. Rough rice is projected to account for 43 percent of total U.S. rice exports in 2003/04, the highest share on record. Combined milled and brown rice exports (on a rough-equivalent basis) are projected at 53 million cwt in 2003/04, down 35 percent from a year earlier and the smallest in several decades. Northeast Asia and the European Union are the top export markets for U.S. milled rice (including brown rice). The Middle East and Sub-Saharan Africa are also large markets for U.S. milled rice. The United States will face severe price competition from Asian exporters in these two price sensitive export markets this year. Total rice use--domestic and residual plus exports--in 2003/04 is projected at 219 million cwt, down 8 percent from the year- earlier record. Total domestic use--including residual, or unreported losses in transporting, processing, and marketing--is projected to increase more than 9 percent to a record 124 million cwt in 2003/04. U.S. ending stocks of all rice for 2003/04 are projected at 22 million cwt, down 18 percent from a year earlier and the smallest since 1980/81. The stocks-to-use ratio is projected at 10 percent, down from 11.2 percent a year earlier and the lowest since 1974/75. The stocks situation varies by class. For long grain, ending stocks are projected to drop 34 percent to 10.4 million cwt, the smallest since 1995/96. For medium/short grain rice, ending stocks are projected at 9.8 million cwt, up 5 percent from a year earlier. Global Rice Prices Show Little Strength Despite Smaller Supplies Despite three consecutive years of declining world rice ending stocks and smaller total supplies, global trading prices are expected to show little, if any, strength in 2003/04. In fact, global trading prices have shown no significant increase since December 2002, a result of adequate global exportable supplies and weaker import demand. Thailand’s prices have actually dropped a few dollars a ton since late summer due to a lack of new sales and government release of some stocks to cover export commitments. Trading prices rose in late 2002 and early 2003 as India reduced its level of export subsidies. Prices will be pressured downward in the near-term as Thailand and Vietnam harvest their main crops over the next few months. In mid-November 2003, export prices for Thailand’s 100-percent grade B milled rice in Bangkok were quoted at $199 per ton, down a dollar or two from a month earlier and $5-$6 below prices in January. Since January 2003, prices have traded between $199 and $210 per ton, one of the longest periods of relatively stable prices. Prices for Vietnamese 5-percent brokens in Ho Chi Min City were quoted at $196 per ton in mid-November 2003, $15 per ton higher than quoted prices in early August, a result of tight supplies. Prices for similar type and quality of U.S. long grain rice--No. 2, 4-percent brokens, f.o.b. Houston--have risen more than $120 per ton since late March to $320 due to near-record exports of milled rice in 2002/03 and much smaller supplies in 2003/04. The U.S. price difference over Thailand for similar grades of rice has increased substantially since January 2003, exceeding $140 per ton by November. World rice production is projected at 390.6 million tons (milled basis) in 2003/04, up almost 3 percent from a year earlier, but still more than 4 percent below the 1999/2000 record of 408.7 million tons. India accounts for the bulk of the 2003/04 production increase. Among other exporters, larger crops are projected for Argentina, Australia, Egypt, Pakistan, Thailand, and Uruguay. For the importers, the top Asian buyers--Indonesia, the Philippines, Malaysia, and Bangladesh--are all projected to harvest record crops in 2003/04. Outside Asia, Nigeria and Brazil are projected to harvest larger crops in 2003/04. World rice consumption is projected at a record 413.3 million tons in 2003/04, up less than 1 percent from a year earlier. India accounts for the largest share of the increase. With consumption exceeding production in 2003/04 by almost 23 million tons, ending stocks are projected to drop 21 percent to 83 million tons. This is the third consecutive year of declining global ending stocks and the lowest stocks since 1983/84. The global stocks-to-use ratio is projected at 20.1 percent, the smallest since 1981/82. Despite the tight stocks situation, assuming normal weather for the rest of the 2003/04 market year, little price strength is expected in global markets. Global Rice Trade Projected To Decline 6 Percent in 2004 World rice trade is projected at 25.5 million tons (milled basis) in calendar year 2004, more than 6 percent below a year earlier and the second consecutive year of declining global rice trade. In fact, trade in 2004 is projected to be nearly 9 percent smaller than the 2002 record of 27.9 million tons. Bumper crops in major importing countries--Indonesia, Bangladesh, Brazil, Nigeria, Malaysia, and the Philippines--are the main factors behind the smaller trade forecast for 2004. In 2004, weaker exports by India and the United States are projected to more than offset stronger shipments from Thailand, Australia, Argentina, Uruguay, and Egypt. On the import side, a decline in 2004 by the Philippines, Brazil, Bangladesh, Nigeria, and Saudi Arabia is projected to offset greater imports by Iran, Iraq, Malaysia, Mexico, and Cuba. In 2003, global trade declined nearly 3 percent to 27.2 million cwt. A 2.5-million-ton drop in India’s exports and weaker shipments from Australia and Argentina more than offset record exports from the United States and larger shipments from Vietnam, China, and Egypt. Among major importers, big declines in 2003 imports by Nigeria, Indonesia, and Iraq more than offset increased purchases by Bangladesh, Brazil, Saudi Arabia, and the Philippines. U.S. Outlook for 2003/04 Smaller Crop, Tighter Supplies Projected for 2003/04 U.S. rice supplies are projected to decline 9 percent to 241 million hundredweight (cwt) in 2003/04, as a much smaller carry- in and a weaker harvest more than offset record imports. At 26.8 million cwt, beginning stocks are 31 percent below a year earlier. The total rice harvest of 198.2 million cwt is 6 percent smaller than the year earlier near-record, a result of smaller plantings. Long grain supplies, projected at 172.2 million cwt, are down 11 percent. Combined medium/short grain supplies are projected to decline almost 3 percent to 67 million cwt. U.S. 2003 Rice Crop Drops 7 Percent On Smaller Plantings; Yield a Record High The 2003/04 U.S. rice crop is forecast at 198.2 million hundredweight (cwt) (rough basis), down 12.7 million cwt from a year earlier. A 7-percent cut in plantings to 3 million acres more than offset a record yield. The average yield, projected at 6,656 pounds per acre, is up 78 pounds from a year earlier. This is the fourth consecutive year of a record U.S. average field yield. Long grain accounts for the bulk of this year’s decline in rice production. U.S. long grain production is projected at 146 million cwt, down 7 percent from a year earlier. Medium grain production is projected at 49.5 million cwt, a drop of more than 5 percent from a year earlier. In contrast, short grain production, accounting for around 1 percent of the total U.S. rice crop, is projected at 2.8 million cwt, up 82 percent from 2002/03. California produces nearly all of the U.S. short grain rice crop. Low price expectations at planting, plus weather problems in parts of the South, accounted for the decline in long grain plantings in 2003/04. In 2002/03, U.S. long grain supplies were the largest on record, a major factor behind the weak price expectations. Adverse weather at planting in California--where the bulk of the U.S. medium grain crop is grown--is responsible for most the decline in medium grain acreage this year. Southern medium grain plantings are actually up slightly from last year. During most of 2002/03, medium grain prices in the South were higher than long grain prices. U.S. Average Yield Estimated At Record 6,656 Pounds Per Acre In early November, NASS forecasted average field yields for 2003/04 at a record 6,656 pounds per acre, up 78 pounds from a year earlier. Expanded plantings of newer, high yielding long grain varieties, plus generally favorable weather across much of the South during critical growing months are behind the record U.S. yield. This is the fourth consecutive year of a record average U.S. rice yield. Annual yield growth has averaged more than 1 percent since 2000/01 after being almost stagnant from 1988/89 to 1999/2000. Field yields are projected higher this year for all reporting States except California and Texas, with record yields projected for Arkansas, Louisiana, Mississippi, and Missouri. The Arkansas average field yield is projected at 6,600 pounds per acre, up 160 pounds from last year. Mississippi’s average yield is also forecast at 6,600 pounds, up 200. For Louisiana, field yields are forecast at 5,800 pounds, an increase of 300 pounds from 2002. Missouri’s average yield is projected at 6,100 pounds, an increase of 50 pounds from last year. In contrast, California’s yield is projected to drop 240 pounds per acre to 7,900, the smallest since 1999, a result of adverse weather during much of the growing season. A cold wet spring-- which severely delayed plantings in California this year--was followed by an extremely hot summer. The average yield in Texas is projected to decline 700 pounds per acre to 6,400, also the smallest since 1999. Texas experienced weather problems this summer as well--primarily severe storms and hurricane damage. Rice Area & Production Projected To Decline In All U.S. Reported States Rice acreage is smaller in 2003/04 in all reporting U.S. rice growing States. Louisiana accounts for the largest share of this year’s 229,000-acre decline in total rice harvested area. Harvested acreage dropped 90,000 acres to 445,000, the smallest harvested acreage in Louisiana since 1987. Declines in other States were smaller. In Arkansas--the largest rice growing State in the United States--harvested area is projected at 1.45 million acres, down 49,000 from a year earlier and smallest since 2000. At 495,000 acres, harvested area in California is down 33,000 acres from a year earlier. Mississippi’s rice acreage is estimated at 233,000 acres, down 20,000 from a year earlier. Missouri’s rice plantings are estimated at 170,000 acres, a drop of 12,000 acres from 2002/03. Both Arkansas and Missouri experienced weather problems in some areas that limited plantings this year. Texas rice area is estimated at 181,000 acres, down 25,000 acres from a year earlier. This is the smallest rice acreage in Texas since the mid-1930s. Higher production costs than other southern rice growing States, lack of an economically viable rotation crop for many producers, and weather problems such as hurricanes account for the long-term decline in rice plantings in Texas. Total U.S. rice production is projected to decline 12.7 million cwt in 2003, with production projected smaller this year in all reported States. California, Louisiana, and Texas account for the bulk of the decline in U.S. rice production. Production declines in other States are much smaller. The 2003 California crop is projected to drop 9 percent to 39.1 million cwt, a result of both the smaller plantings and weaker yield. Louisiana’s rice crop is projected at 25.8 million cwt, down 12 percent from a year earlier, a result of the smaller plantings. The yield is the highest on record. At 11.6 million cwt, Texas rice production is nearly 21 percent below a year earlier and the smallest crop since 1957, a result of both the smaller plantings and the weaker yield. In Arkansas, production in 2003 is projected to decline less than 1 percent to 96 million cwt, a result the smaller plantings. Mississippi’s production is forecast to decline 5 percent to 15.4 million cwt, a result of the smaller plantings. Finally, Missouri’s rice crop is projected at 10.4 million cwt, a drop of 6 percent from 2002, also a result of smaller area. Total U.S. Rice Supplies Projected To Drop 9 Percent to 241 Million Cwt Total U.S. rice supplies in 2003/04 are projected at 241 million cwt, down 9 percent from a year earlier and the smallest since 2000/01. A big drop in beginning stocks, plus the smaller crop more than offset record imports. Based on data from the NASS August 2003 Rice Stocks report, beginning stocks for 2003/04 are estimated at 26.8 million cwt, down 31 percent from a year earlier and the smallest since 1999/2000. Arkansas, California, and Texas accounted for the bulk of the decline in beginning stocks in 2003/04. U.S. rice imports for 2003/04 are projected at a record 16 million cwt, up 8 percent from a year earlier, with medium grain expected to account for the largest share of the increase. In 2002/03, U.S. rice imports jumped more than 12 percent to a record 14.8 million cwt, with large shipments of medium grain rice to Puerto Rico from China and Australia accounting for most of the increase. In 2001/02 Australia shipped substantial amounts of medium grain rice to Puerto Rico. Neither China nor Australia typically supplied much rice to the United States or its territories prior to 2001/02. Italy regularly exports very small quantities of arborio rice--a medium grain specialty rice--to the United States. Excluding the medium grain shipments, nearly all U.S. rice imports are aromatic varieties not currently grown in the United States. Nearly all are long grain varieties. More than 80 percent of U.S. long grain imports come from Thailand--mostly jasmine rice--and the bulk of the remainder is basmati from India and Pakistan. Total U.S. imports of rice have increased sharply over the past two decades. Much of this growth has been driven by increases in the Asian-American population. Long grain--the dominant class of rice grown in the United States--accounts for the bulk of the decline in total rice supplies this year. Total long grain supplies are projected at 172.2 million cwt, down more than 11 percent from a year earlier. A big decline in carryin and the smaller crop more than offset record long grain imports. Data from the August 2003 Rice Stocks report indicated long grain stocks at the beginning of the 2003/04 market year at 15.7 million cwt, a more than 41-percent decline from a year earlier. The 146-million-cwt long grain crop is 11.2 million cwt below the year earlier near-record. In contrast, long grain imports are projected at a record 10.5 million cwt, an increase of almost 5 percent from 2002/03. For medium/short grain rice, supplies in 2003/04 are projected to drop almost 3 percent to 67 million cwt. A smaller carry-in and the weaker harvest more than offset the record imports. Data from the August 2003 Rice Stocks report indicate beginning stocks of medium/short grain rice at 9.3 million cwt, down 13 percent from a year earlier. At 52.2 million cwt, the combined medium/short grain crop is nearly 3 percent below a year earlier. In contrast, imports of medium/short grain rice are projected to jump almost 15 percent to a record 5.5 million cwt. Puerto Rico is expected to account for the bulk of medium/short grain imports. U.S. 2003/04 Rice Exports Projected To Drop 24 Percent To 95 Million Cwt Total rice use in 2003/04 is projected to decline 8 percent from the year earlier record to 219 million cwt, with exports accounting for all of the decline. Total domestic use (including residual) is projected to increase more than 9 percent to a record 124 million cwt. In contrast, U.S. exports are expected to decline 24 percent to 95 million cwt. Long grain accounts for most of the decline in total use. Total long grain use is projected at 161.8 million cwt, down more than 9 percent from 2002/03. Combined medium/short grain total use is projected to drop 4 percent to 57.2 million cwt. Ending stocks of total rice are projected at 22 million cwt, a decline of 18 percent from a year earlier and the smallest since 1980/81. Total Rice Use in 2003/04 Projected To Drop To 219 Million Cwt Total rice use--domestic and residual plus exports--in 2003/04 is projected at 219 million cwt, down 8 percent from the year earlier record. Exports account for all of the projected decline. Total exports are projected at 95 million cwt, a 24-percent drop from the year earlier record. Tighter supplies and much higher prices are behind the smaller U.S. export forecasts. Total domestic use--including residual, or unreported losses in transporting, processing, and marketing--is projected to increase more than 9 percent to a record 124 million cwt in 2003/04. Food, industrial, and residual is projected at a record 120 million cwt, up more than 9 percent from 2002/03. Seed use is projected to increase 8 percent to 4 million cwt. While rice consumption in the United States has increased steadily since the late 1970s, the rate of growth has slowed since the mid-1990s. From 1980/81 through 1995/96, growth in total U.S. rice consumption (excluding shipments to U.S. territories and seed use) averaged nearly 5 percent a year. Since 1995/96, growth in U.S. rice consumption--including the residual- -has averaged about 3 percent a year. In February, USDA’s 2003 long-term baseline projection forecasted a growth rate of a little more than 2 percent a year for the next decade. While less than the half the rate achieved a decade ago, growth is still double the rate of population growth. Fewer meals fixed at home and a premium on meal preparation time have contributed to a slowing of the growth in U.S. rice consumption. Despite the slower expansion in total use of rice, per capita U.S. rice consumption--including brewers’ use and pet food--continues to rise. Per capita rice consumption--including direct food use, processed foods, pet foods, and beer--has nearly doubled since the early 1980s and is currently estimated at more than 28 pounds. Since 1990/91, per capita consumption has grown almost a half pound a year, down from a pound a year in the 1980s. Per capita rice consumption is projected to continue rising over the next decade. U.S. Rice Exports Projected To Drop 24 Percent to 95 Million Cwt U.S. rice exports in 2003/04 are projected to drop 24 percent to 95 million cwt (rough basis). Higher U.S. prices, a much larger price difference over major Asian competitors’ prices, and smaller supplies at home are behind the bearish export forecast. Despite the expected decline, exports would still be the third highest on record. Milled rice exports are projected to account for almost all of decline in total U.S. rice exports in 2003/04. U.S. rough rice exports for 2003/04 are projected at 42 million cwt, down just a million cwt from the year earlier record but still the second highest on record. Mexico, Central America, and South America are expected to be the largest markets for U.S. rough rice exports in 2003/04. Rough rice is projected to account for 43 percent of total U.S. rice exports in 2003/04, the highest share on record share. In 2002/03, big purchases by Brazil, and to a lessor degree Cuba, plus record shipments to top regular buyers--Mexico and Central America--were responsible for a 34-percent jump in U.S. rough exports to a record 43 million cwt. In 2003/04, Mexico and Central America are expected to again import record or near- record amounts of U.S. rough rice. In addition, Brazil--an occasional buyer of U.S. rice--is expected to again be a major importer U.S. rough rice. Although a much smaller buyer than Brazil, Venezuela--also an occasional buyer--has already imported U.S. rough rice in 2003/04. In contrast, Cuba’s imports of U.S. rice are likely to decline sharply in 2003/04 due to much higher U.S. prices. Southern long grain accounts for the bulk of U.S. rough rice exports, with most of this rice going to Latin America, primarily Mexico and Central America. When rice supplies are tight in South America, Brazil will typically import substantial amounts of U.S. southern long grain rough rice. Brazil will then absent the U.S. market when rice supplies are plentiful in South America. In years when rice supplies are tight in South America, some of the Andean countries will import large amounts of U.S. rice, nearly all southern long grain rough rice. Like Brazil, in years of strong South American rice harvests, the Andean countries buy much smaller amounts of U.S. rice. Cuba returned as buyer of U.S. rice in 2001/02. Turkey is the only other large market for U.S. rough rice. Turkey typically imports California medium grain rice but will take southern medium grain if California supplies are tight. Turkey’s purchases of U.S. rice--mostly rough rice--are expected to be small this year compared with previous years. Tight U.S. supplies of medium grain rice and much higher prices are behind the bearish expectations for U.S. shipments to Turkey this year. The European Union--mostly Spain and Italy--typically imports much smaller amounts of U.S. rough rice, mostly long grain. The U.S. is the only major rice exporter that allows rough rice exports, and rough rice has become a larger share of U.S. exports, accounting for more than a third in recent years. U.S. rough rice exports have expanded substantially since 1990/91, when many Latin American countries began to open their markets to imported rice and reduced support to their producers. Prior to 1990/91, rough rice accounted for a very small share of U.S. rice exports, with the EU accounting for most of the purchases. Occasionally South America--mostly Brazil--imported larger quantities of U.S. rough rice when regional supplies were tight. While none of the large Asian exporting countries allows rough rice exports, a few smaller exporters do. Argentina, Uruguay, and Guyana typically ship some rough rice within Latin America, and Australia has shipped rough rice to Turkey. Combined milled and brown rice exports (on a rough basis) are projected at 53 million cwt in 2003/04, down 35 percent from a year earlier and the smallest in several decades. Tight U.S. supplies, much higher U.S. prices, a widening price difference with Thailand, and weaker global rice trade are behind the big decline in U.S. milled rice exports this year. The price difference over similar grades of rice from Thailand--a major competitor of the U.S. in South Africa and parts of the Middle East--has increased substantially since last spring, and at more than $140 per ton, is the highest in 4 years. Northeast Asia and the European Union are the top export markets for U.S. milled rice (including brown rice). Nearly all U.S. shipments to Northeast Asia--Japan, South Korea, and Taiwan--are purchased as part of the importers’ WTO commitments. The European Union purchases mostly brown rice from the United States that is fully milled in Europe. The EU also purchases much smaller amounts of fully milled rice from the United States. The Middle East and Sub-Saharan Africa are also large markets for U.S. milled rice. The United States will face severe price competition from Asian exporters in these two export markets this year. The Caribbean--mostly Haiti--is another major market for U.S. milled rice. Despite a locational advantage for the United States, Thailand can successfully compete in the Caribbean when the U.S. price difference is wide. The United States is the largest supplier of rice to Canada, accounting for more than two- thirds Canada’s annual rice imports. Aromatic rice accounts for the bulk of Canada’s imports of Asian rice. In some years, Southeast Asia--primarily the Philippines and Indonesia--import U.S. milled rice. These shipments are mostly non-commercial sales. The United States occasionally ships some rice--mostly as food aid--to Central Asia as well. Eastern Europe and non-EU Western Europe import small amounts of U.S. milled also. Long Grain Accounts for Bulk of the Decline in U.S. Rice Exports Long grain accounts for the bulk of the projected decline in total U.S. rice use in 2003/04. Total long grain use is projected at 161.8 million cwt, down more than 9 percent from a year earlier. Exports account for all of the projected decline in long grain use. Total domestic use (including residual) of long grain rice is projected at 87.8 million cwt, up 11 percent from a year earlier. In contrast, long grain exports are projected to decline more than 25 percent to 74 million cwt, still the third highest on record. Milled rice is project to account for virtually all of the decline in long grain exports. Smaller U.S. supplies, weaker global trade, and strong competition from Asian exports-- primarily Thailand--in price sensitive markets like the Middle East and Sub-Saharan Africa are behind the bearish long grain export forecast. In contrast, long grain rough rice exports are projected to remain at record levels in 2003/04. The U.S. faces much less price competition from Asian exporters in the rough rice--mostly Western Hemisphere--markets. Total use of combined medium/short grain rice is projected at 57.2 million cwt, down 4 percent from a year earlier. Exports account for all of the projected decline in 2003/04 medium/short grain total use. In contrast, domestic use--including residual-- is projected to increase 6 percent to 36.2 million cwt. Medium/short grain exports in 2003/04 are projected to decline 17 percent from the year earlier near-record to 21 million cwt. Import commitments under the World Trade Organization (WTO) for Japan, South Korea, and Taiwan are expected to account for the bulk of U.S. medium grain exports in 2003/04. Shipments to other buyers of U.S. medium grain rice--primarily Turkey and Jordan-- are expected to be much smaller in 2003/04. Since the mid-1990s, Japan, Turkey, and Jordan have been major markets for U.S. medium/short grain rice each year. South Korea and Taiwan have been more recent buyers. Except for Japan’s 1994 emergency imports, all imports by the three Northeast Asian countries have been part of their WTO commitments. South Korea--which barred rice imports for more than 2 decades--has been a regular buyer of U.S. rice since 2001/02. Taiwan began purchasing U.S. rice in 2002--also absent from the global rice market for several decades--and was a major importer of U.S. medium/short grain rice in 2002/03. Much like Japan and South Korea, Taiwan became self-sufficient in rice by barring imports and strictly controlling trade. The only other recent market for U.S. medium grain rice has been Uzbekistan. In both 2001/02 and 2002/03 Uzbekistan purchased 55,000 to 60,000 tons of U.S. medium/short rice under U.S. food aid programs. Very little, if any, U.S. medium/short grain rice will likely be available for food aid in 2003/04. Japan is the largest global importer of medium/short grain rice and the biggest market for U.S. medium/short grain rice as well. In fact, more than half of California’s annual rice exports typically go to Japan. The United States supplies about half of Japan’s annual rice imports. China, Australia, and Thailand supply most of the rest. Virtually all of Japan’s rice imports are purchased under a Tariff-Rate Quota agreed to under the WTO. Extremely high tariffs on any over-quota rice imports virtually preclude any above quota purchases. Japan’s WTO imports are not scheduled to increase until another WTO agreement is reached. Similar to Japan, both South Korea’s and Taiwan’s rice imports are solely the result of agreements under the WTO. South Korea’s minimum access imports are scheduled to increase annually from 1995 through 2004. Taiwan agreed to a minimum access import level for rice in 2002/03 as a requirement for joining the WTO. For 2003/04, Taiwan imported about the same amount of rice as a year earlier, this time as part of a TRQ. Taiwan’s future import requirements are being negotiated. Turkey is typically the second largest market for U.S. medium grain rice. Over the last decade, Turkey has shifted from being mostly a milled rice market for the U.S. to being nearly a total rough rice market for the United States. Jordan is the smallest of the major commercial markets for U.S. medium grain rice. Jordan imports nearly all milled rice. U.S. Ending Stocks Projected To Be the Smallest Since 1980/81 U.S. ending stocks of all rice for 2003/04 are projected at 22 million cwt, down 18 percent from a year earlier and the smallest since 1980/81. A 9-percent decrease in total supplies offset weaker exports. The resulting stocks-to-use ratio is projected at 10 percent, down from 11.2 percent a year earlier. This is the lowest stocks-to-use ratio since 1974/75. The stocks situation is varies by class of rice. For long grain rice, ending stocks are projected to drop 34 percent to 10.4 million cwt, the smallest since 1995/96. The long grain stocks- to-use ratio is projected at 6.4 percent, down from 8.8 percent a year earlier and the smallest in more than 2 decades. The tight stocks situation will keep U.S. long grain prices under strong upward pressure throughout the 2003/04 market year. For medium/short rice, the ending stocks situation for 2003/04 is somewhat different. Ending stocks of medium/short grain rice are projected 9.8 million cwt, up 5 percent from a year earlier but still well below the 1995/96-2002/03 average of 11.4 million cwt. A 3-percent decrease in medium/short grain supplies was more than offset a 4 percent drop in total use. The resulting medium/short grain stocks-to-use ratio is projected at 17.1 percent, up from 15.6 percent a year earlier. U.S. Season-Average Farm Price Projected Highest Since 1998/99 The U.S. season-average farm price for 2003/04 is projected at $7.00 to $7.50 per cwt, up from $4.22 a year earlier and the highest since 1998/99. A big drop in U.S. supplies is the main factor driving the bullish U.S. price forecast. Despite rising U.S. prices, international trading prices have shown little, if any, strength in several years. Without a major weather disturbance there is little reason to expect any significant strengthening of world rice prices this year. U.S. producers are expected to realize marketing loan benefits for the remainder of the 2003/04 market year. Total U.S. food aid purchases for fiscal 2003 are estimated at 309,107 tons, down from 372,000 a year earlier. U.S. Season-Average Farm Price Projected at $7.00 to $7.50 Per Cwt The 2003/04 U.S. season-average farm price (SAFP) is projected at $7.00 to $7.50 per cwt, up from $4.22 a year earlier. This is the highest SAFP since 1998/99 and the first increase since 1996/97. A 9-percent drop in U.S. supplies plus continued strong demand in both the U.S. and global rice markets is the main factor driving U.S. prices higher. Average U.S. monthly cash prices for rough rice have increased every month since March 2003. In October, USDA estimated the September average cash price at $6.13 per cwt, the highest monthly price since September 1999, and indicated a mid-October price of $6.52. U.S. monthly cash prices have been above a year earlier every month since March 2003. U.S. prices began to rise last December in response to the record pace of U.S. exports in 2002/03. Prices have been further boosted by a tight U.S. supply situation in 2003/04, a result of both a smaller 2003 crop and a big drop in beginning stocks. Prices had steadily declined since January 2001, primarily due to two consecutive years--2001/02 and 2002/03--of record U.S. supplies and extremely low prices for long grain rice--the dominant class of rice traded globally--in international markets. Price quotes for both long and medium grain rice are higher than a year earlier. Quoted prices for long grain rice have been increasing for a year, despite little, if any, strength in the global market. In mid-November, long grain rough rice prices were quoted at around $7.25 per cwt in the Delta, more than double the levels quoted a year earlier and the highest since the summer of 1999. In Southwest Louisiana, long grain rough rice was quoted at $7.65 per cwt, up more than $3.80 from a year earlier and the highest since May 1999. Price quotes in Texas in mid-November for long grain rough rice were $7.25 per cwt, up more than $3.50 from a year earlier and the highest since May 1999. For California medium grain rice, farm prices have steadily risen for since last November. Prices were quoted at almost $12 per cwt in mid-November, up from less than $5 a year earlier. These are the highest prices for California medium grain rice since at least the summer of 1999 after California harvested its weakest crop in a decade in 1998. The main factors behind the year-long rise in California medium grain prices are; first, near-record exports in 2002/03, and second, a 9-percent drop in California production in 2003/04. In the South, medium grain prices were quoted around $8.60 per cwt in mid-November, up from $5.00 a year earlier and the highest since the spring of 1999. Despite higher prices for medium than long grain rice at planting, southern producers increased medium grain plantings only 10,000 acres in 2003/04 to 186,000. Marketing Loan Gains Average $3.08 Per Cwt Through Mid-November U.S. producers are eligible for marketing loan benefits when foreign prices (represented by USDA’s weekly adjusted world price) fall below the loan rate for rough rice. Loan rates vary by class of rice--long, medium, and short grain--with an all-rice average loan rate fixed at $6.50 per cwt. Since the spring of 1999 world prices have remained below the loan rate, making U.S. rice producers eligible for marketing loan benefits. Through mid-November 2003, the 2003/04 payment rate for all rice has averaged $3.08 per cwt (simple average), down 29 cents from the 2002/03 average. World prices are expected to remain below the loan rate for the remainder of the 2003/04 market year, indicating producers will remain eligible for continued payment. From August 1995 until late March 1999, the adjusted world price exceeded the loan rate, thus marketing loan payments were not available. Payment rates were less than $1 per cwt from the spring of 1999 until the start of the 1999/2000 market year. Declining world prices caused payment rates to rise during 1999/2000 and by mid-March 2000 exceeded $2 per cwt for all three classes of rice--long, medium, and short. For 1999/2000, the payment rate averaged $1.95 per cwt. Payment rates continued to rise throughout 2000/01 as the adjusted world price declined. From May through July 2001 the announced world price for all three classes of rice averaged $2.82 per cwt, the lowest on record. The average payment rate during these 3 months by class were $3.69 for long grain, $3.67 for medium, and $3.55 for short grain. This is the largest payment rate for long grain rice since the summer of 1987 and the largest payment rate on record for medium and short grain rice. The payment rate averaged $3.14 per cwt for the 2000/01 August- July market year, the highest since 1986/87. Despite a slight strengthening of the adjusted world price in 2001/02, the average payment rate actually rose 23 cents to $3.37 per cwt for 2001/02. For 2002/03, the average payment rate remained unchanged at $3.37 per cwt. The average adjusted world price in 2002/03 was virtually the same as a year earlier. U.S. Food Aid Purchases for Rice Declined 17 Percent in FY 2003 Total U.S. food aid purchases for rice for fiscal 2003 (October 2002 to September 2003) are estimated at 309,107 tons, down 64,700 tons from a year earlier. In both the text and tables of this report, U.S. food aid purchases are assigned appropriate October-September fiscal years based on the fiscal year in which the funding was approved. Shipment dates may not necessarily fall within the same fiscal year as funding approval dates. Food aid accounted for 7 percent of total U.S. rice exports in fiscal 2003, down from nearly 11 percent a year earlier. In fiscal 2002, total U.S. food aid purchases totaled 373,807 tons, up from 234,530 tons a year earlier. U.S. rice is shipped under four food aid programs: PL 480 (Title I and Title II), Section 416 (b) surplus removal, Food for Progress, and Food for Education. In fiscal 2003, shipments under PL 480 Title I (concessional sales) totaled 117,817 tons, down from 185,727 tons a year earlier. The Philippines was the only recipient for Title I shipments in 2003. Total purchases under PL 480 Title II, or food donations, accounted for nearly 121,000 tons in fiscal 2003, an increase of 53,320 from fiscal 2002. Indonesia was the largest recipients of Title II donations in fiscal 2003, taking more than 60,000 tons. Other major recipients of Title II donations in fiscal 2003 were: Benin, Niger, Guatemala, Honduras, and Burkina Faso. In addition, about 47,000 tons of rice were purchased in fiscal 2003 under the Food for Progress program, up from about 32,000 in fiscal 2002. At 21,000 tons, Cameroon received the largest allocation in fiscal 2003. Uzbekistan ranked second with 10,000 tons. There were no Section 416(b) allocations in fiscal 2003. Finally, agreements under the Food for Education program totaled 23,660 tons in fiscal 2003, down slightly from a year earlier Ghana, Cote d’Ivoire, Mozambique, and Cameroon account for most of the allocation in fiscal 2003. In fiscal 2002, Title I agreements for rice totaled 185,727 tons, up 99,527 from a year earlier. Indonesia was the largest recipient, purchasing 90,135 tons. Uzbekistan ranked second, purchasing 58,519 tons. The Philippines accounted for the remainder, purchasing 37,073 tons. In addition, about 67,400 tons of rice was purchased in fiscal 2002 under PL 480 Title II, down 4,870 tons from a year earlier. Major recipients of Title II allocations in fiscal 2002 were Indonesia (25,430 tons), Niger (9,310 tons), Benin (4,500 tons), Nepal (4,500 tons), and Guatemala (3,780 tons). In fiscal 2002 about 64,300 tons were purchased under the Section 416(b) program, up from 30,640 tons purchased for export under Section 416(b) in fiscal 2001. North Korea and the Philippines took more than 22,000 tons each in fiscal 2002. Ukraine and Moldova accounted for most of the remainder. U.S. rice purchased under the Food for Progress program totaled 31,880 tons in fiscal 2002, up 2,620 from a year earlier. Nigeria, Cote d’Ivoire, and Senegal were the largest recipients. Finally, in fiscal 2002, purchases under the Global Food for Education program totaled 24,520 tons, about 1,400 tons below a year earlier. Mozambique, Congo, Nicaragua, Gambia, and El Salvador were the major recipients. Recap of 2002/03 U.S. Rice Market U.S. Rice Exports Climb to Record 124.6 Million Cwt in 2002/03 Despite a 2-percent decrease in production, record imports and a big increase in beginning stocks boosted total U.S. rice supplies to a record 264.8 million cwt in 2002/03. At a record 178.4 million cwt, long grain accounted for most of the supply expansion. Total exports were reported at 124.6 million cwt, an increase of 32 percent from a year earlier and the largest on record. Despite an 8 percent decline in domestic and residual use, ending stocks declined 32 percent to 26.8 million cwt, the smallest since 1998/99. The season-average farm price for rice dropped 3 cents to $4.22 per cwt, the lowest since 1986/87 and the sixth consecutive year of a decline. Weaker Plantings Pull U.S. Rice Crop Down 2 Percent to 211 Million Cwt The 2002/03 U.S. rice crop is estimated at 211 million cwt, down 2 percent from a year earlier. The crop is the second largest on record. The decline is the result of a 3-percent decrease in plantings to 3.24 million acres. The average yield--6,578 pounds per acre--is up 82 pounds from a year earlier and the highest to date. This was the third consecutive year of a record yield. Long grain accounted for all the area contraction. Long grain rice plantings declined nearly 7 percent to 2.54 million acres. In contrast, plantings of medium grain rice rose 14 percent to 676,000 acres. California--where more than two-thirds of the U.S. medium grain crop is grown--accounted for most of the medium grain area expansion. Medium grain plantings were higher in the South as well. Plantings of short grain rice--which accounts for around 1 percent of U.S. rice production--were estimated at 27,000 acres, up 1,000 from 2001/02. California produces almost all of the U.S. short grain crop. In 2002, year-to-year production changes varied by class. Long grain production is estimated to have been 157.2 million cwt, a drop of 6 percent from a year earlier but still the second highest on record. A more than 6-percent decrease in long grain area more than offset a fractionally higher yield. In contrast, medium grain production increased 13 percent from a year earlier to 52.2 million cwt, a result of larger plantings and a fractionally higher yield. The short grain crop is estimated to have declined 6 percent to 1.51 million cwt, as a fractional increase in area was more than offset by a much weaker yield. The 2002 short grain crop was the smallest since 1997. The 2002/03 area contraction was primarily due to weak prices and low price expectations at planting for long grain rice--a result of a record long grain crop and record long grain supplies a year earlier. Long grain plantings declined in every southern rice- growing State except Mississippi where plantings were unchanged from 2001. Long grain rice is grown almost exclusively in the South. In Arkansas, the largest rice producing State, 2002 rice plantings are estimated at 1.52 million acres, down 7 percent from the year earlier record. At 540,000 acres, Louisiana’s rice acreage was just 8,000 acres smaller than a year earlier. Mississippi’s rice plantings of 255,000 acres were unchanged from 2001/02. In Texas, rice plantings declined 10,000 acres to 206,000. Missouri’s rice area declined 10 percent from the year earlier record to 190,000 acres. In contrast to the South, California rice acreage expanded 13 percent to 533,000 acres. At planting, California medium grain prices were higher than a year earlier and well above long grain prices, a result of a 12- percent decline in 2001 California production and strong medium grain export demand. The national average yield for 2002 is estimated to have been 6,578 pounds per acre, up more than 1 percent from 2001 and a record to date. Yields were higher than a year earlier in Arkansas, Missouri, and Texas; and unchanged in Louisiana. Yields in 2002 were the highest to date in Arkansas, Louisiana, Missouri, and Texas. In the South, generally favorable weather conditions across the region and the introduction of new, high- yielding long grain varieties were the main factors behind such strong yields in 2002. Arkansas’ average yield of 6,440 pounds per acre was up more than 1 percent from a year earlier and the highest to date. In Louisiana, average yields remained at 5,500 pounds per acre, a record to date as well. Mississippi’s yield declined 3 percent to 6,400 pounds per acre. The Texas yield is estimated to have been 7,100 pounds per acre, the highest on record and almost 4 percent higher than a year earlier. At 6,050 pounds per acre, Missouri’s 2002 yield was up 50 pounds per acre from a year earlier. In California, the average yield dropped 30 pounds per acre to 8,140 pounds, well below the record 8,500 pounds achieved in 1991, 1992, and 1994. Adverse weather, environmental regulations, and unique characteristics of the varieties have, at times, contributed to California’s weaker yields in recent years. Rice production decreased in 2002 in every reporting State except California, with Arkansas accounting for the bulk of the total decline. The Arkansas 2002 crop is estimated at 96.8 million cwt, down 6 percent from a year earlier, a result of the smaller plantings. Arkansas accounts for more than 45 percent of total U.S. rice production. Louisiana’s 2002 rice crop declined 2 percent to 29.4 million cwt, also due to smaller plantings. Rice production in Mississippi is estimated at 16.2 million cwt, a decline of 3 percent from 2001, a result of the weaker yield. Area in Mississippi was unchanged. In Missouri, 2002 rice production is estimated at 11 million cwt, an 11 percent decline from a year earlier. Rice production in Texas is estimated at 14.6 million cwt, down 1 percent from 2001. In contrast to the southern rice growing States, California’s 2002 rice crop is estimated to have increased 12 percent to a near-record 43 million cwt, a result of the much larger plantings. U.S. 2002/03 Total Rice Supplies Climbed to Record 264.8 Million Cwt U.S. rice supplies in 2002/03 are estimated to have been 264.8 million cwt, up 3 percent from a year earlier and the highest on record. A bumper crop, record imports, and very large beginning stocks accounted for the record supplies. Beginning stocks-- estimated at 39 million cwt--were up 37 percent from a year earlier and the largest since 1993/94. Arkansas accounted for about two-thirds on the year-to-year increase in beginning stocks. U.S. rice imports in 2002/03 totaled 14.8 million cwt, a record to date and up 12 percent from a year earlier. Medium grain shipments to Puerto Rico from Australia and China accounted for almost half of the 1.6-million cwt year-to-year expansion in imports. Australia and China have only recently been shipping rice to the United States, nearly all going to Puerto Rico. Thailand, India, and Pakistan typically account for more than 95 percent of U.S. long grain rice imports. Despite the increase in medium grain imports, long grain remains the dominant class of rice imported by the United States. Nearly all long grain rice imports are aromatic varieties not currently grown in the United States. Supplies were higher in 2002/03 for both long grain and combined medium/short grain rice. Long grain supplies increased 3 percent to a record 194.1 million cwt. A 130-percent increase in beginning stocks to 26.8 million cwt plus record imports of 10 million cwt more than offset the smaller crop. Long grain rice stocks entering the 2002/03 marketing year were the highest since 1987/88. Imports of long grain rice were up 10 percent from a year earlier. For medium/short grain rice, total supplies rose 3 percent in 2002/03 to 68.9 million cwt. A 32-percent decline in beginning stocks to 10.7 million cwt was more than offset by record imports and the larger crop. Medium/short imports were estimated at 4.8 million cwt, a 19-percent increase from a year earlier and the largest to date. Shipments to Puerto Rico from Australia and China accounted for nearly all of the increase. At 53.7 million cwt, medium/short grain production was nearly 13 percent higher than a year earlier. U.S. Rice Exports Jumped 32 Percent To a Record 124.6 Million Cwt in 2002/03 Total U.S. rice use, including exports, domestic consumption, and residual (unreported losses in processing, transporting, and marketing), was 238 million cwt in 2002/03, up 9 percent from a year earlier and the largest on record. Exports accounted for all of the expansion. At 124.6 million cwt, exports were 30 million cwt higher than a year earlier and the largest on record. Very competitive prices and record supplies were behind the bullish U.S. export performance in 2002/03. Total domestic disappearance (including residual, or unreported losses in processing, transporting, and marketing) was 113.4 million cwt, down 8 percent from a year earlier. Food, industrial, and residual--estimated at 109.7 million cwt--was down 8 percent from 2001/02. The food, industrial, and residual use term is the 'balancer' in the supply and use equation. Food, industrial, and residual use is calculated to equate total supply and total demand. All other supply and use categories--beginning stocks, production, seed use, imports, exports, and ending stocks--are based on year-end data. Seed use, estimated at 3.71 million cwt, was down 7 percent from a year earlier. Seed use is calculated by multiplying planted acreage by the seeding rate. Long grain accounted for most of the decline in total domestic and residual use in 2002/03. Domestic and residual use of long grain rice is estimated at 79.2 million cwt, down 9 percent from a year earlier. Domestic and residual use for medium/short grain rice is estimated at 34.3 million cwt, down 4 percent from a year earlier. Much like the total rice balance sheet, the domestic and residual use term is the 'balancer' in supply and use tables by class. Both milled and rough rice exports increased sharply in 2002/03. Rough rice exports, estimated at a record 43 million cwt, were up 34 percent from a year earlier. Record shipments to Mexico and near-record to Central America--the top two regular buyers of U.S. rough rice, plus large shipments to South America--an occasional market for U.S. rice--were behind the huge rough rice export expansion. In addition, both Cuba and Turkey took larger amounts of U.S. rough rice in 2002/03. Except for Turkey, these rough rice buyers take almost exclusively southern long grain rice. Turkey imports mostly California medium grain but will take southern medium grain if California supplies are tight. Milled and brown rice exports (on a rough-equivalent basis) are reported at 81.5 million cwt, an increase of 30 percent from a year earlier and one of the highest on record. Big increases in shipments to Haiti, Venezuela, the EU-15, Cote d’Ivoire, Ghana, Indonesia, and the Philippines accounted for most of the increase in milled rice exports in 2002/03. In contrast, milled rice exports were smaller than a year earlier to Japan, the former Soviet Union, and Saudi Arabia. By class, long grain exports climbed 34 percent to a record 99.2 million cwt in 2002/03. Both milled and rough rice exports were higher than a year earlier. For combined medium/short grain rice, exports increased 21 percent to 25.3 million cwt, a virtual record and the largest since 1983/84. Both milled and rough rice exports of medium/short grain rice were higher than a year earlier. U.S. 2002/03 Ending Stocks Dropped 31 Percent Ending stocks for all U.S. rice declined 12.2 million cwt in 2002/03 to 26.8 million cwt, the smallest since 1998/99. The resulting stocks-to-use ratio dropped to 11.2 percent from 17.9 percent a year earlier. Long grain rice accounted for most of the decline in ending stocks. Ending stocks of long grain rice declined 42 percent in 2002/03 to 15.7 million cwt. Ending stocks are still more than 4 million cwt higher than in 2001/02. The resulting stocks-to-use ratio nearly halved to 8.8 percent. Except for 2001/02, the long grain stocks-to-use ratio ranged from 7.6 percent to 11.9 percent from 1995/96 to 2002/03. Combined medium/short grain ending stocks declined nearly 13 percent to 9.3 million cwt. The stocks-to-use ratio dropped to 15.6 percent from 18.9 percent in 2002/03. The stocks-to-use ratio for medium/short grain rice is typically higher than for long grain. Around two-thirds of the U.S. medium/short grain crop is grown in California where harvest does not typically begin until late September, about 2 months behind the start of the southern long grain harvest on the Gulf Coast. The 2002/03 U.S. season-average price was reported at $4.22 per cwt, down 3 cents from a year earlier and the lowest since 1986/87. Record U.S. supplies and only fractional strength in international trading prices--which were already low at the start of the 2002/03 season--were primary factors behind a weaker U.S. average rice price in 2001/02. International Outlook for 2003/04 Global Trading Price Show Little Strength; Import Demand Weaker Despite three consecutive years of declining world rice ending stocks and smaller total supplies in 2003/04, global trading prices have shown no significant strength since late 2002. In fact, Thailand’s prices have actually dropped a few dollars a ton since September 2003 on a lack of new business and expectations of new supplies by yearend. Thailand’s intervention purchases and reduced export subsidies by India account for most of the price strength since late 2002. Little, if any, price strength is expected in the near-term as Thailand’s and Vietnam’s main crops will be harvested over the next few months. Although global supplies are projected to drop nearly 4 percent in 2003/04, major exporting countries are projected to have adequate supplies to meet export commitments. In addition, except for Northeast Asia, which experienced an adversely cold wet growing season, no major importing region is currently experiencing a significant weather problem. Global Rice Production Projected To Increase Nearly 3 Percent in 2003/04 World rice production is projected at 390.6 million tons (milled basis) in 2003/04, up almost 3 percent from a year earlier, but still more than 4 percent below the 1999/2000 record of 408.7 million tons. Global area harvested is projected at 149.4 million hectares, up almost 3 percent from a year earlier, but still 5.7 million hectares below the 1999/2000 record. India accounts for most of the 2003/04 projected area expansion. At 3.9 tons per hectare, the average global rough rice yield is fractionally above a year earlier but still marginally below the 2001/02 record of 3.93 tons. After increasing substantially since the late 1960s, average global field yields have been nearly flat since 1999/2000. India, a major exporter and the second largest rice producing country, accounts for the bulk of this year’s production increase, with India’s 2003/04 rice production projected at 89 million tons (milled basis), up almost 18 percent from a year earlier. In 2002/03, a delayed monsoon was responsible for India harvesting its weakest crop since 1992/93. Among the other exporters, larger crops are projected in 2003/04 for Argentina, Australia, Egypt, Pakistan, Thailand and Uruguay. Burma’s crop is projected unchanged from the 2002/03 near-record. Among the top Asian importers--Indonesia, the Philippines, Malaysia, and Bangladesh--all four are projected to harvest record crops in 2003/04. Among the top non-Asia importers, both Brazil and Nigeria are projected to harvest larger crops in 2003/04. In contrast, production is projected to decline in 2003/04 in some countries. China, the world’s largest rice producing country and a major exporter, is expected to experience the largest production decline. At 118 million tons, China’s crop is more than 3 percent smaller than a year earlier and well below the 1997/98 record of 140.5 million tons. This is the sixth consecutive year of declining rice production in China. Despite the smaller crop, China is expected to have plenty of rice for the domestic market and to remain a major exporter. Two other major exporters--Vietnam and the United States--are projected to harvest smaller crops in 2003/04 as well, although Vietnam’s crop is projected to be only slightly smaller than its 2002/03 record. Among importers, only Japan, South Korea, and Taiwan are projected to harvest significantly smaller crops this year. A cold, wet growing season adversely impacted production this year in all three countries. However, imports are not projected to exceed World Trade Organization (WTO) commitments for any of the three. North Korea’s crop was reduced a little by the adverse weather this year, but production losses were not as severe as in the other three Northeast Asian countries. In the Middle East, Iran’s crop is projected to decline from last year’s record. And although Iraq’s crop is projected slightly higher than last year, production remains well below levels achieved in the mid-1990s. Both countries are projected to import more rice in 2004 than in 2003. World rice consumption is projected at a record 413.3 million tons in 2003/04, up less than 1 percent from a year earlier. India accounts for the largest share of the increase. Rice consumption is also projected to increase in 2003/04 in the Philippines, Indonesia, Bangladesh, Vietnam, Thailand, and South Africa. In contrast, rice consumption--including residual, or unreported losses in processing, transporting, and marketing--is projected to decline in 2003/04 in Japan, South Korea, and North Korea. In Japan and South Korea the lower consumption is primarily the result of diet diversification. North Korea’s smaller consumption is due to a lack of supplies. With consumption exceeding production in 2003/04 by almost 23 million tons, global ending stocks are projected to drop 21 percent to 83 million tons. This is the third consecutive year of declining global ending stocks and the lowest stocks since 1983/84. In 2000/01, global ending stocks were a record 147.9 million cwt. The global stocks-to-use ratio is projected at 20.1 percent, down from 25.8 percent a year earlier and the smallest since 1981/82. However, assuming normal weather the rest of the 2003/04 market year, little price strength is expected in global markets despite the big decline in stocks and resulting smaller stocks-to-use ratio. China accounts for most of this year’s expected reduction in global ending stocks. China’s ending stocks have declined each year since 1999/2000. Other countries are expected to draw stocks down in 2003/04 as well. Japan’s stocks are projected to decline 76 percent to 335,000 tons--a result of the weak crop--the smallest since 1991/92. South Korea’s stocks are projected to decline 42 percent to 617,000 tons, the smallest since 1996/97, also the result of a smaller crop. Ending stocks are also projected to decline in 2003/04 in Brazil, Burma, Indonesia, Thailand, Vietnam, and the United States. In contrast, India’s ending stocks are projected to increase a million tons to nearly 13 million. Stocks are expected higher in 2003/04 in Pakistan as well. The higher stocks for both countries are the result of production rebounds from last year. World trade is projected at 25.5 million tons in calendar year 2004, more than 6 percent below a year earlier and nearly 9 percent smaller than the 2002 record of 27.9 million tons. In 2004, weaker imports by India and the United States are projected to more than offset stronger shipments from Thailand, Australia, Argentina, Uruguay, and Egypt. On the import side, a decline in imports in 2004 by the Philippines, Brazil, Bangladesh, Nigeria, and Saudi Arabia are projected to offset greater imports by Iran, Iraq, Malaysia, Mexico, and Cuba. In 2003, global trade declined nearly 3 percent to 27.2-million cwt. A 2.5-million-ton drop in India’s exports and weaker shipments from Australia and Argentina more than offset record exports from the United States and larger shipments from Vietnam, China, and Egypt. Among major importers, big declines in imports by Nigeria, Indonesia, and Iraq more than offset increased purchases by Bangladesh, Brazil, Saudi Arabia, and the Philippines. International Trading Prices Show Little Strength in 2003 Global trading prices have shown no significant strength since January 2003, a result of adequate global exportable supplies and weaker import demand. In fact, Thailand’s export prices have actually dropped a few dollars a ton since late summer on the lack of new sales and government release of some stocks to cover previous export commitments. Trading prices rose in December 2002 and January 2003 as India reduced its level of export subsidies. In mid-November 2003, export price quotes for Thailand’s 100 percent grade B in Bangkok were quoted at $199 per ton, down a dollar or two from a month earlier and $5-$6 below prices in January. Thailand’s prices are currently being pressured by expectations of a bumper harvest and new supplies starting in December. Since January 2003, prices have traded between $199 and $210 per ton, one of the longest periods of relatively stable prices for Thailand. In fact, currency fluctuations have accounted for much of the meager price movements since winter. Prices for Vietnamese 5-percent brokens in Ho Chi Min City were quoted at $196 per ton in mid-November 2003, up about $5 from a month earlier and $15 per ton higher than quoted prices in early August. The recent price increases are primarily due to tight supplies. Harvest of Vietnam’s main winter-spring crop does not begin until February. The bulk of Vietnam’s exports come from the winter-spring crop. Vietnam’s price quotes are currently about $10 per ton above a year-earlier. A big increase in exports in 2003 and a slightly smaller 2003/04 crop are behind this year’s higher prices for Vietnam’s rice. Vietnam is currently trading rice at just a few dollars per ton below price’s for similar categories of Thailand’s rice. Vietnam has typically sold rice at $20-$30 per ton below Thailand’s prices based on quality and reliability. In recent years, the quality of Vietnam’s rice has increased. Prices for similar type and quality of U.S. long grain rice--No. 2, 4-percent brokens, f.o.b. Houston--have risen more than $120 per ton since late March due to near-record exports of milled rice in 2002/03 and much smaller supplies of rice in 2003/04. In mid-November, prices at Texas mills for U.S. long grain milled rice (number 2, 4 percent brokens) were quoted at $320 per ton, up $55 from early August and the highest since August 1999. The U.S. price difference over Thailand for similar grades of rice has increased substantially since January 2003. After increasing the U.S. price to reflect a 'free-on-board vessel' quote, U.S. prices are more than $140 per ton above prices for similar grades of Thai rice. In January 2003 the difference averaged less than $10 per ton. A steady increase in U.S. prices and stagnant prices for Thailand’s rice are behind the widening difference. From August 1998 through December 2002 the difference averaged about $70 per ton. Prices for U.S. California milled rice have risen substantially since January due to a very strong export pace in 2002/03 and a big drop in California supplies in 2003/04. Medium grain prices have been well above prices for U.S. long grain rice since October 2001. This month, quoted prices for California medium grain milled rice (number 1, 4 percent brokens, Sacramento mill) average $485 per ton, up $65 from early August and $220 above quotes in January. These are the highest prices quoted since September 1999. India and the United States Are Projected To Ship Less Rice in 2004 Among the top six rice exporters--Thailand, Vietnam, India, China, the United States, and Pakistan--only Thailand and China are projected to increase shipments in 2004. Both India and the United States are projected to post sharp drops in exports in 2004. Exports from Vietnam and Pakistan are projected flat in 2004. Among the medium-sized exporters, Argentina, Australia, Burma, Egypt, and Uruguay are projected to expand exports in 2004. In 2003, a huge drop in India’s exports, plus weaker shipments from Burma, Argentina, and Australia, more than offset record U.S. exports and larger shipments from China, Egypt, Uruguay, and Pakistan. Major Exporters Thailand: Thailand is expected to remain the world's largest rice exporter, shipping a near-record 8 million tons in 2004, up 750,000 tons from this year. A bumper crop and projections for weaker shipments from India and the United States are behind the bullish export forecasts. Thailand's 2003/04 crop is projected at a record 17.8 million tons (milled basis), up 4 percent from a year earlier, a result of record plantings. Thailand traditionally competes with the United States in certain high-quality long grain rice markets--primarily in the European Union (EU), the Middle East, and South Africa--and with Vietnam, India, China, and Pakistan in various intermediate- and low- quality long grain markets. Thailand exports mostly long grain rice--including parboiled rice and 100 percent brokens--and smaller quantities of its premium jasmine rice, an aromatic. Thailand exports more than a million tons of its premium jasmine rice each year, with the United States a major market. Thailand competes with India for parboiled sales in both Africa and the Middle East. Vietnam: Vietnam is typically the world's second largest rice exporter and is projected to export 4 million tons in 2004, unchanged from 2003 but well above 3.25 million tons in 2002. However, exports would still be below Vietnam’s 1999 record of 4.55 million tons. Two consecutive years of bumper harvests and weaker shipments from India are behind the robust 2003 and 2004 export forecasts. Vietnam is projected to produce 21 million tons of rice in 2003/04, 1-2 percent below the year-earlier record, a result of weaker plantings. All of Vietnam’s rice exports are long grain, mostly intermediate and low quality, mostly shipped to Asia, Africa, and the Middle East. Vietnam produces three major rice crops a year. The 10-month crop accounts for 25 percent of production and is harvested between November and February in the South. This crop is declining in area and is the lowest yielding of Vietnam's three crops. The largest crop, the winter-spring crop, accounts for nearly half of total production and is harvested in February-March --------1/. ------------ 1/ The harvest dates are for production occurring in Southern Vietnam. Harvest dates differ in the North but most rice production occurrs in the South. --------- The winter- spring crop has more than doubled since 1990/91 and has the highest yield of the three crops. The winter-spring crop accounts for the bulk of Vietnam’s exports. The summer-autumn crop accounts for about 25 percent of annual production and is harvested July through September. China: China's 2004 rice exports are projected at 2.5 million tons, unchanged from 2003 but well below the 1998 record of more than 3.7 million tons. Although China’s 2003/04 crop is projected to drop 4.2 million tons to 118 million--the sixth consecutive year of declining production and the smallest crop since 1985/86- -China still has plenty of rice to satisfy domestic demand and maintain exports. The smaller crop is the result of weaker plantings. China’s 2003/04 rice area is estimated at 27.3 million hectares, down 900,000 hectares from a year earlier and the smallest since 1962/63. China’s rice plantings have declined 14 percent since 1997/98, with its early indica crop accounting for the bulk of the decline. China announced a new grain policy in 1999 that reduces incentives to plant low-quality early rice, which is grown mostly in the south. Much of the early rice crop is of poor quality and is either stored for years or used as feed. United States: The United States is projected to export 3 million tons of rice in 2004, down 800,000 from the 2003 record. Smaller U.S. supplies and a widening price difference over major Asian competitors for similar grades of rice are behind the weaker export forecast for 2004. The U.S. share of world trade is projected at 13.6 percent, about the same as a year earlier. The U.S. share of world rice trade has generally declined since the mid-1970s. In 1975, the United States accounted for about 28 percent of global rice exports. By 1989, the U.S. share had shrunk to 20 percent and was less than 15 percent by 1995. Greater supplies from low-cost Asian exporters account for the bulk of the decline in the U.S. market share over the past 25- plus years. In the late-1980s, Vietnam re-entered the global rice export market after an absence of more than 30 years. In the mid- 1990s, India switched from exporting a few hundred thousand tons a year to regularly exporting more than a million tons. In addition, by the 1990s the top South American exporters-- Argentina and Uruguay--both significantly expanded exports, mostly within the MERCOSUR trading block. Southern long grain accounts for 75-80 percent of U.S. rice exports, with Mexico, Central America, the Caribbean, the EU, Saudi Arabia, Canada, and South Africa the largest markets. In addition, Brazil typically buys substantial amounts of U.S. long grain when regional supplies are inadequate. The United States also exports smaller quantities of medium/short grain rice, mostly to Japan, Turkey, South Korea, Jordan, and--since 2002-- Taiwan. The United States also shipped medium/short grain rice to Uzbekistan as food aid in 2001 and 2002. U.S. exports to Japan, South Korea, and Taiwan are part of each importer’s minimum access requirements under the World Trade Organization (WT). California supplies most of U.S. medium/short grain exports. India: For 2004, India is projected to export 2.5 million tons of rice, down 1.7 million from this year and more than 4.1 million tons below the 2002 record of 6.65 million. The export contractions after 2002 are due to tighter supplies. In 2002/03, an unfavorable monsoon--the first since 1987/88--cut India’s production to 75.7 million tons, down nearly 19 percent from the year earlier record. This year production is projected to climb 18 percent to 89 million tons, a result of both larger plantings and a higher yield. Despite the 2003/04 bumper crop, total supplies are projected to be up only 1 percent from a year earlier. India has banned new export sales since late summer due to tight supplies. The ban is expected to be lifted by late 2003 or early 2004. India exports both a premium-priced basmati rice to higher income countries, as well as low-quality non-aromatic long grain milled rice to developing countries. Principal markets for basmati rice are the Middle East, the EU, and the United States. Russia, South Africa, other Sub-Saharan Africa, and the Middle East are major export markets for India's non-basmati rice. Much of India’s non- basmati exports to South Africa and the Middle East are parboiled which sell at a premium to regular milled rice. Pakistan: Pakistan is projected to export 1.7 million tons of rice in 2004, unchanged from 2003 but still well below the 2001 record of 2.4 million. Pakistan’s exports have dropped sharply since 2001, primarily due to three consecutive years--2000/01- 2002/03--of severe drought that sharply reduced production and supplies. Weaker plantings accounted for the bulk of the 3-year production decline, yield reductions were more modest. In 2003/04 Pakistan is projected to produce 4.5 million tons of rice, up 6 percent from a year earlier, a result of a much stronger yield. However, production remains below the 1999/2000 record of 5.2 million tons. Nearly all of Pakistan’s rice is produced in irrigated fields. Like India, Pakistan exports both high-quality basmati rice-- which sells at a substantial premium in high-income markets--as well as intermediate- and low-quality non-aromatic long grain milled rice to developing countries, mostly in Africa, where it competes with China and Vietnam. Around a third of Pakistan's rice production is basmati. Higher income countries purchase the bulk of Pakistan’s basmati exports. For all rice, Sub-Saharan Africa, Afghanistan, Bangladesh, Indonesia, the Middle East, and the EU are leading export markets for Pakistan. Australia: Australia's rice exports in 2004 are projected to increase 125,000 tons to 300,000, still well below the 1999 record of 667,000 tons. Exports remain below levels reported from 1999 to 2001, as result of big declines in production in 2001/02 and 2002/03. Australia’s 2003/04 rice production is projected at 640,000 tons, up 131 percent from a year earlier, a result of a major increase in area. Despite this year’s increase, rice production in Australia remains well below the 2000/01 record of almost 1.3 million tons. In 2002/03, severe drought resulted in the weakest crop-- estimated at just 279,000 tons--for Australia since 1972/73. At 38,000 hectares, rice plantings in Australia in 2002/03 were 80 percent below the 2000/01 record of 186,000 hectares. Limited water supplies are responsible for the big drop in plantings. Australia's rice farmers plant in October and harvest in April- May. The rice crop is grown primarily in New South Wales. The bulk of Australia’s rice is exported. Australia produces and exports primarily high-quality medium/short grain rice and has captured around 18 percent of the Japanese market since WTO- required imports were first purchased in 1995/96. Papua New Guinea and certain countries in the Middle East are other major export markets for Australian rice producers. Limited supplies of water for irrigation are a constraint on any significant expansion in Australia's rice production. Egypt: Egypt is projected to export 700,000 tons of rice in 2004, up 50,000 tons from a year earlier but still below the 1969 record of 772,000 tons. Virtually all of Egypt’s rice exports are medium/short grain, with the eastern Mediterranean a major market. Egypt’s rice exports have increased sharply since the late 1990’s, a result of both larger crops and--in some years-- export subsidies. In 2001 Egypt exported 705,000 tons of rice-- the second highest on record--a result of both record production and export subsidies. Since 1999/2000, Egypt has harvested record- or near-record crops each year, a major factor behind the strong export performance in recent years. Egypt’s 2003/04 rice production is projected at a near-record 3.9 million tons, up 5 percent from a year earlier but still almost 2 percent below the 2000/01 record. This year’s larger crop is the result of expanded area and a higher yield. Egypt’s yields are the highest in the world. Much of Egypt’s rice production receives government subsidy. Argentina: Argentina and Uruguay are the two largest rice exporters in South America, growing and shipping mostly long grain rice, mostly to markets within Latin America. In 2004, Argentina’s rice exports are projected at 200,000 tons, up 100,000 from a year earlier but well below the 1999 record of 674,000 tons. Argentina’s rice exports have dropped sharply since 1999, a result of both smaller supplies in Argentina and, until this year, weaker demand from Brazil--the region’s largest importer. Argentina’s 2003/04 rice crop--harvested in April-May 2004--is forecast at 455,000 tons, up 11 percent from a year earlier but nearly 58 percent below the 1998/99 record of 1.08 million tons. This year’s larger crop is the result of a much higher yield. Area is actually slightly lower. At 130,000 hectares, rice area in Argentina remains less than half its 1998/99 record of 289,000 hectares. Low prices and weaker imports from 1999 to 2002 by Brazil--Argentina’s largest export market--account for the sharp drop in harvested area for rice since 1998/99. Uruguay: Like Argentina, rice production in Uruguay has declined since the 1998/99 record, as weaker prices and smaller imports by Brazil from 1999 to 2002 have led to reduced plantings. In 2003/04, Uruguay’s rice production is projected at 735,000 tons, up 20 percent from a year earlier and the first increase since 1998/99. The larger crop is the result of both a stronger yield and expanded plantings. Despite this year’s larger crop, production remains 19 percent below the 1998/99 record of 910,000 tons. Uruguay’s area has not declined as sharply as in Argentina. At 175,000 hectares in 2003/04, rice plantings in Uruguay are down 17 percent from the 1998/99 record of 205,000. Uruguay is projected to export 750,000 tons in 2004, up 50,000 tons from a year earlier and the second highest on record. However, exports remain below the 2001 record of 806,000 tons. Uruguay is the largest rice exporter in South America. Although exports are below record, Uruguay has maintained a brisk pace of exports since the mid-1990s. Both Argentina and Uruguay have special trade arrangements in the Brazilian market afforded them by their membership in the MERCOSUR trade block (which includes Argentina, Brazil, Paraguay, and Uruguay). Like Argentina, Uruguay produces and exports mostly long grain rice. The European Union (EU): Although a net importer of rice, the EU regularly exports rice outside the region. In 2004, the EU is projected to export 475,000 tons, unchanged from a year earlier and the largest since 1992. Italy accounts for nearly all of the EU rice exports outside the region. The EU exports medium grain rice, mostly to countries in the eastern Mediterranean. The EU exports smaller amounts of rice--mostly food aid--to the former Soviet Union, the Balkans, North Korea, and Sub-Saharan Africa. EU production in 2003/04 is projected at 1.6 million tons, down 5 percent from a year earlier, a result of a lower yield. At 400,000 hectares, area is up slightly from last year. Much of the rice growing areas of the EU--in Italy, Spain, France, Portugal, and Greece--experienced an extremely hot summer in 2003. Rice area in the EU has only dropped about 7 percent since the 1996/97 record--primarily due to government set-a-side programs--and has been relatively stable at about 400,000 hectares since 1999/2000. The bulk of the EU’s rice production is medium grain, although long grain’s share has increased since the late 1980s. Italy and Spain account for nearly 85 percent of annual total EU rice production. In 2003/04, ending stocks are projected at 606,000 tons, down 20 percent from a year earlier and 32 percent below the record 888,000 tons reported in 1999/2000 and 2000/01. Bumper crops and extremely slow expansion in domestic rice consumption contributed to rising stocks in the EU in the second half of the 1990s. Burma: In 2004 Burma is projected to export 500,000 tons of rice, an increase of 50,000 tons from 2003 but only half the level exported in 2002. Burma’s exports of 1 million tons in 2002 were the largest since 1966. Burma was the world’s largest rice exporter prior to World War II, and remained a major exporter through the mid-1960s when shipments began a long-term decline. By the 1990’s, exports had dropped sharply, averaging less than 100,000 tons a year from 1997 through 2000. Burma’s exports have picked up since 2001, primarily due to bumper crops. Trade is strictly controlled by the Government of Burma. Burma's 2003/04 rice crop is projected at more than 10.4 million tons, unchanged from a year earlier but slightly below the 2000/01 record of nearly 10.8 million tons. Area is projected at a record 6.4 million hectares, up 200,000 hectares from a year earlier. Burma exports mostly low-quality, but competitively priced, long grain rice. Most of Burma's rice exports are 25-percent brokens, with the remainder being parboiled and small quantities of high- quality long grain rice. Burma exports almost exclusively indica rice. Other Exporters: In addition to the major exporters described above, several other countries typically export smaller amounts of rice each year. Japan: Although a net importer of rice, Japan has exported rice each year since 1997. Virtually all of this rice is shipped as food aid, mostly within Asia. In 2004, Japan is projected to export 200,000 tons of rice, unchanged from a year earlier. In 2001, Japan exported 501,000 tons, mostly to North Korea. In 1998, it exported 642,000 tons of rice, mostly food aid to Indonesia. This was the largest amount of rice exported by Japan in a single year since 1981. Japan is one of the highest cost rice producers in the world, producing primarily high-quality medium/short grain rice. Japan’s rice exports have primarily been the result of declining domestic consumption and large supplies, including rice imported under the World Trade Organization commitments. Despite more than three decades of government financed area diversion programs, rising yields have offset much of the production impact of the annual area contraction. These factors contributed to a huge build-up in stocks in Japan in the late 1990s. Since the peak of 3.2 million tons in 1997/98, ending stocks have declined to just 335,000 tons in 2003/04. Producer prices in Japan are substantially above global trading prices. Rice production in Japan in 2003/04 is projected at 7.1 million tons, down 12 percent from a year earlier, and the smallest crop in more than 30 years. The crop is fractionally below the 1993 harvest that led to Japan’s 1994 emergency imports. This year, a cold, wet growing season lowered average yields 12 percent. Through 2002/03, rice production in Japan had declined almost 39 percent since the 1967/68 record of 13.2 million tons. A 48- percent drop in area is responsible for the long-term production decline. Taiwan: In 2004 Taiwan is projected to export 100,000 tons of rice, up 10,000 from a year earlier but below levels shipped from 1999 to 2001. Taiwan typically exports a small amount of rice each year, mostly as food aid. Like Japan, Taiwan faces declining per capita rice consumption that, when combined with producer prices above international trading levels, leads to surplus rice. Taiwan’s 2003/04 production is projected at 1.14 million tons, down 10 percent from a year earlier, a result of smaller plantings and a weaker yield. Taiwan experienced a cold, wet spring that adversely effected its 2003/04 production. Like Japan, authorities on Taiwan operate programs designed to shift rice land to alternative crop enterprises. Despite this year’s weaker crop, Taiwan’s ending stocks are projected to be slightly higher than a year earlier. Guyana: Guyana is typically the third largest rice exporting country in South America. In 2004 Guyana is projected to export 175,000 tons of rice, unchanged from a year earlier but almost 39 percent below the 1997 record of 285,000 tons. For 2003/04, rice production is projected at 370,000 tons, unchanged from a year earlier or the 2001/02 record. Production is double the 1993/94 level. Record plantings are behind three consecutive bumper crops. Yields remain below the 1997/98 record. Guyana’s rice area has expanded substantially since the early 1990s, reaching a record 150,000 hectares in 2000/01, double 1992/93 rice area. Despite large crops and only modest expansion in domestic use, Guyana’s exports have remained substantially below record levels achieved in the mid-1990s and late 1990s, primarily due to a lack of competitiveness in world markets. This has resulted in a large buildup in stocks. The EU is the primary markets for Guyana’s rice. Global Import Demand in 2004 To Decline Second Consecutive Year Global rice imports are projected to decline 6 percent in 2004 to 25.5 million tons, the second consecutive year of declining global trade. Trade would be the smallest since 2000/01. In 2004, weaker imports by the Philippines, Bangladesh, Brazil, Nigeria, and Saudi Arabia are projected to more than offset larger imports by Iran and Iraq. Trade in 2003 is forecast at 27.2 million tons, down more than 2 percent from the 2002 record. In 2003, weaker imports by Nigeria, Indonesia, Iraq, Nigeria, and Senegal more than offset greater shipments to Bangladesh, Brazil, Saudi Arabia, and the Philippines. Major Importers Asia Asia is the largest import market for rice in the world. Asia is projected to import 7.4 million tons of rice in 2004, down 16 percent from 2003 and well below the 1998 record of more than 13 million tons. The huge expansion in imports in 1998 was largely driven by El Nino crop damage in the region, primarily in Southeast Asia. From 2001 through 2003, Asian rice imports increased each year. Indonesia: Indonesia is projected to remain the world’s largest rice importer in 2004, taking 3 million tons, unchanged from this year but down 500,000 tons from 2002. Imports remain well below the 1998 record of almost 5.8 million tons. Adequate stocks and bumper crops are behind Indonesia’s weaker imports after 2002. Indonesia's 2003/04 crop is projected at 33.5 million tons, up 1 percent from a year earlier--a result of a higher yield--and the largest on record. At 11.6 million hectares, rice plantings in 2003/04 remain below the near 12 million hectares--the largest on record--reported in 1998/99. Indonesia has had difficulty maintaining record rice acreage, especially on its densely populated main island of Java. Use has exceeded production every year since 1991/92, causing Indonesia to regularly import large amounts of rice. USDA’s long- term global rice market forecast projects Indonesia to regularly increase imports and remain a major importer of rice for the foreseeable future. The Philippines: The Philippines are projected to import 500,000 tons of rice in 2004, down 800,000 tons from 2003 and the smallest since 1995. A record harvest and excessive stocks are behind the much weaker import forecast for 2004. The Philippines is projected to produce a record 8.84-million-ton rice crop in 2003/04, up 5 percent from a year earlier. The larger crop is the result of a record yield. Area remains at the 2002/03 record of 4.1 million hectares. Despite growing domestic rice consumption, ending stocks rose every year from 1998/99 to 2002/03, reaching a record 3.8 million tons. Stocks are projected to be only fractionally lower in 2003/04. Consumption, projected at a record 9.7 million tons, is expected to exceed milled rice production by 860,000 tons. This marks the 13th consecutive year that consumption has exceeded production. Lack of resources to expand rice growing area and develop infrastructure, slow growth in yields, and steadily increasing population indicate the Philippines will be a regular importer of rice in the foreseeable future. Bangladesh: In 2004, Bangladesh is projected to import 500,000 tons of rice, down 500,000 tons from a year earlier. Imports remain well below the 1998 record of 2.5 million tons. Record supplies and bumper crops are behind the modest import levels in 2003 and 2004. In 2003/04 Bangladesh is projected to produce 26 million tons of rice, up more than 2 percent from a year earlier and the largest to date. Area and yield are the highest on record. From 1998/99 through 2003/04, Bangladesh has produced record crops each year. This was a major factor behind the decline in Bangladesh’s rice imports each year from 1999 through 2002. Bangladesh has substantially increased both area and yield since the late 1990s. In addition, Bangladesh’s ending stocks rose substantially in the late 1990s, also contributing to weaker imports. Bangladesh has a preference for parboiled rice, although price is a limiting factor and may force imports of low-quality long grain rice if cheap parboiled is not available. Despite expanding production, Bangladesh is projected to remain a major importer of rice over the next decade. China: In 2004, China is forecast to import 300,000 tons of rice, up 50,000 tons from this year but below the 305,000 tons imported in 2002. Nearly all of China's rice imports are fragrant rice from Thailand that is bought by high-income urban consumers. China is self-sufficient in rice, given the current policy environment. China is projected to increase imports over the next 10 years, mostly higher quality specialty rice to urban consumers. Japan and South Korea: Since 1995, these two countries have opened their rice markets to limited imports in accordance with agreements under the Uruguay Round of the General Agreement on Tariffs and Trade (UR-GATT). Both have extremely strong preferences for medium/short grain varieties for table consumption. The United States competes with Australia and China, and to a lesser extent with Italy and Egypt, for the medium grain exports into these Northeast Asian markets. However, because Japan and South Korea use long grain rice in certain processed uses, a portion of the import competition is open to other potential suppliers, mostly Thailand. Under the UR-GATT, Japan's minimum access purchases were scheduled to rise from nearly 380,000 tons (milled basis) in 1995/96 to 758,000 tons by 2000/01. However, in 1999 Japan opted for rice tariffication. This allowed the rate of growth in its annual rice imports--0.8 percent of base period (1986-88) consumption--to halve to 0.4 percent in return for allowing over- quota imports. Japan imported 644,000 tons of rice in its 1999/2000 fiscal year (April-March), and 682,000 tons in 2000/01. Japan’s imports are expected to remain at 682,000 tons a year unless a new agreement is reached. The United States has supplied almost half of Japan’s rice imports since 1995/96. Japan is projected to import 650,000 tons (milled basis) of rice in 2004, unchanged from a year earlier. The tariff on over-quota imports was set at 341 yen per kilogram for 2001, nearly 5 times the average price of U.S. rice imported in 2000/01. To date, there have been virtually no over-quota rice imports. South Korea agreed to increase its WTO minimum access imports from 57,000 tons (milled basis) in 1995/96 to 205,000 tons by 2004/05. South Korea’s imports are projected at 205,000 tons in 2004, up from 180,000 a year earlier. South Korea’s 2003/04 rice crop is estimated at 4.5 million tons, down 9 percent from a year earlier, a result of both smaller area and a weaker yield. South Korea experienced the same cold, wet weather that adversely affected Japan’s production. This is the smallest rice crop since 1980/81 and the second consecutive year of declining production for South Korea. South Korea's rice consumption is projected to decline slightly in 2003/04, a result of declining per capita consumption more than offsetting population growth. Ending stocks are projected at 617,000 tons, 42 percent below a year earlier and the third consecutive year of declining ending stocks. Despite the smaller crop and substantial reduction in ending stocks, South Korea is not expected to import beyond its WTO minimum access requirements. North Korea: North Korea is projected to import 300,000 tons of rice in 2004, down from 600,000 from a year earlier and 652,000 in 2002. Food aid accounts for all of North Korea’s rice imports. Japan has provided the bulk of these shipments in recent years. South Korea began giving substantial amounts of rice to North Korea in 2002. North Korea’s rice production is projected at 1.5 million tons in 2003/04, a 3-percent increase from a year earlier, with both area and yield up slightly. However, production remains well below the 1999/2000 crop of 1.6 million tons and far below even a minimal level of subsistence. North Korea’s rice production has contracted severely since the late 1980s. Existing data suggest that during the 1980s North Korea's rice production averaged slightly more than 2 million tons (milled basis) on 642,000 hectares, with an average paddy yield of nearly 4.7 tons per hectare. From 1990 to 1999, rice production averaged 1.44 million tons on 596,000 hectares with paddy yields of 3.5 milled tons per hectare. Since 2000, production has averaged 1.4 million tons on 570,000 hectares with an average paddy yield of almost 3.6 tons per hectare. Taiwan: Taiwan joined the WTO in late 2001. As a requirement for membership Taiwan agreed to import 144,720 tons (brown rice basis) in 2002 as part of a minimum access requirement. Taiwan agreed to import the same amount in 2003 under a TRQ. Taiwan’s import commitments after 2003 are being negotiated at this time. For calendar year 2004, Taiwan is projected to import 125,000 tons (milled basis), unchanged from 2003. The United States has supplied more than 60 percent of Taiwan’s rice imports in 2002. Taiwan is essentially self-sufficient in rice. For several decades prior to 2002, Taiwan typically imported 3,000-5,000 tons of rice each year, almost entirely varieties not currently grown on the island. Producer prices on Taiwan are 4-5 times prices in the international market for similar grades of rice. Taiwan strictly controls imports to protect producers from lower priced imported rice. Like Japan, Taiwan has experienced declining per capita rice consumption for decades, a result of higher incomes. In 2003/04 Taiwan is projected to produce 1.14 million tons of rice, down 10 percent from a year earlier, a result of both a weaker yield and smaller plantings. Taiwan experienced the same adverse weather this year as Japan and South Korea. At 290,000 hectares, rice area was down nearly 6 percent from a year earlier and the lowest in more than 50 years. The Middle East Rice imports in 2004 by the Middle East are projected at a record 4.85 million tons, up 19 percent from a year earlier. Production is projected at 1.84 million tons in 2003/04, down from 2.1 million a year earlier and well below the 1999/2000 record of 2.24 million tons. A severe drought--which began in 1999--has been a major factor behind the region’s consecutive years of weak rice harvests. The Middle East relies on imports to supply more than two-thirds of its rice consumption. The region has little ability to expand production and is expected to consume more rice each year. The region is traditionally the world's strongest market for high- quality rice--mostly parboiled, premium long grain varieties, and basmati. Iran, Iraq, and Saudi Arabia are the largest importers. Turkey and Jordan import smaller amounts of rice, mostly medium/short grain varieties. Iran: At 1.5 million tons, Iran’s 2004 import projection is up 600,000 from a year earlier and the largest since 1996. Iran’s annual rice imports often show sharp year-to-year fluctuations. Iran has been a major rice importer since the late 1970s and imported a record 1.76 million tons in 1995. Thailand and India currently supply most of Iran’s rice imports. In 2003/04, Iran’s crop is projected at 1.5 million tons, down 16 percent from a year earlier, with both area and yield declining by 8 percent. Production remains well below the 1998/99 record 1.85 million tons. Rice production in Iran dropped sharply from 1999/2000 to 2001/02, a result of a severe drought that cut both area and yield. Iraq: Iraq is projected to import 1.1 million tons of rice in 2004, up 300,000 from a year earlier. Prior to the 2003 war, Iraq had been importing rice commercially under the United Nation’s Oil-for-Food Program, with Vietnam a major supplier. As a result of humanitarian needs arising from the 2003 Iraq War, Iraq received substantial amounts of food aid this spring and summer, including some shipments from the United States. Commercial sales under the United Nation’s Oil-for-Food Program are expected to resume soon. Like Iran, Iraq’s rice crop suffered from severe drought, and production declined in 1999/2000 and 2000/01. In 2000/01, Iraq produced only 40,000 tons of rice, the lowest in more than four decades. Iraq’s 2003/04 crop is projected at 100,000 tons, unchanged from a year earlier but well below the 1994/95 record of 255,000 tons. Saudi Arabia: In 2004, Saudi Arabia is projected to import 950,000 tons of rice, down 150,000 from the year earlier-record. Saudi Arabia does not grow any rice. The country is a major market for high-quality parboiled rice. Turkey: Turkey’s imports are projected at 350,000 tons in 2004, unchanged from this year but below the 1995 record of 416,000 tons. At 240,000 tons, 2003/04 rice production in Turkey is up 3 percent from a year earlier, a result of larger plantings. The yield is actually projected to decline. Production remains below the 1996/97 record of 260,000 tons. Despite an economic downturn, consumption continues to rise. Turkey is typically the second largest import market for medium/short rice--after Japan--with the United States, Egypt, Australia, and the EU the major suppliers. Turkey only became a significant import market in the mid-1980s when production declined. Other Middle East: Syria’s 2004 imports are projected at 170,000 tons, up 20,000 tons from a year earlier but almost 50 percent below record levels imported in the mid-1990s. Jordan’s imports in 2004 are projected at 100,000 tons, up 10,000 from a year earlier. Imports were 20,000 to 60,000 tons higher in the mid- 1990s. The United States typically supplies 30 to 40 percent of Jordan’s rice imports. Jordan imports mostly medium/short grain rice. Finally, at 250,000 tons, Yemen’s rice imports in 2004 are even with the year earlier record. The United States supplies only small amounts of rice to Syria and Yemen. In addition, Syria, Jordan, and Yemen do not grow rice. Sub-Saharan Africa Imports by Sub-Saharan Africa (including the Republic of South Africa) are projected at 5.5 million tons in 2004, down 11 percent from a year earlier and 20 percent below the 2002 record of 6.9 million. Higher trading prices and a slight increase in production to a near-record 7.43 million tons account for much of the import reduction. With the exception of the Republic of South Africa, most of Sub-Saharan Africa has traditionally been a low- quality rice market. Nigeria: Nigeria is the largest rice importer in Sub-Saharan Africa and one of the largest global rice importers after Indonesia. Nigeria’s 2004 rice imports are projected at 1 million tons, down 20 percent from a year earlier well below the 2001 record of 1.9 million tons. Bumper crops and a large buildup in stocks account for recent declines in Nigeria’s rice imports. Nigeria’s production in 2003/04 is projected at a record 2.3 million tons, up 100,000 from a year earlier, with both area and yield the highest on record. Nigeria purchases mostly parboiled rice. Thailand supplied the bulk of this rice during the 1990s. In 2001 India also began to ship parboiled rice to Nigeria, all at a very high subsidy. South Africa: The Republic of South Africa is projected to import 650,000 tons in 2004, down 100,000 from this year and 150,000 tons below the 2002 record. India, Thailand, and the United States supply most of South Africa’s rice imports, mostly high-quality parboiled. The United States has lost substantial market share in this high-quality market. South Africa does not produce rice. Other Sub-Saharan Africa: Senegal is a major market for brokens and a growing market for rice in Sub-Saharan Africa. In 2004, Senegal is projected to import 750,000 tons of rice, unchanged from this year, but down 108,000 tons from the 2002 record. Imports by Senegal have risen substantially since 1995, as consumption growth has outpaced production. Imports supply the bulk of Senegal’s rice consumption. Cote d’Ivoire is projected to import at 650,000 tons of rice in 2004, down 100,000 from the year-earlier record. Consumption growth outstrips production in Cote d’Ivoire. Production remains well below the 2001/02 record level. Imports account for more than half of all rice consumed in Cote d’Ivoire. Ghana is projected to import 250,000 tons in 2004, down 100,000 tons from a year earlier. Ghana’s production is projected at a record 190,000 tons in 2003/04, an increase of 13 percent. Guinea is projected to import 300,000 tons of rice in 2004, down 50,000 tons from the 2003 record. At 520,000 tons, Guinea’s 2003/04 rice production is unchanged from a year earlier but 8 percent below the 2000/01 record. Latin America Imports by Latin America (Mexico, the Caribbean, Central America, and South America) are projected at 3.27 million tons in 2004, down 8 percent from this year. Imports remain below the 1998 record of 3.65 million tons that was largely driven by El Nino crop damage in much of South America. Total production in the region is projected to increase 3 percent in 2003/04 to 14.4 million tons, about 600,000 tons below the 1998/99 record. Latin America is primarily a long grain market, with the United States a major supplier to Mexico, Central America, and much of the Caribbean. Except for the Caribbean, these are primarily rough rice markets for the United States. In South America, the bulk of milled rice imports are typically from other South American countries--primarily Argentina and Uruguay. Regional trading preferences and locational advantages account for much of the intra-regional buying within South America. The United States typically exports rice to South America when regional supplies are insufficient. Mexico: Mexico is projected to import a record 600,000 tons in 2004, up 50,000 tons from a year earlier. A long-term decline in production and a steady rise in use account for the continued growth in imports. The United States supplies nearly all of Mexico’s rice imports. Mexico imports mostly rough rice, nearly all southern long grain. U.S. exporters have a locational advantage over Asian exporters and now face no tariffs under the North American Free Trade Agreement. The United States is one of the few major rice exporting countries that allow rough rice exports. In fact, none of the major Asian exporting countries ships rough rice. The Caribbean: Cuba and Haiti are the largest markets for rice in the Caribbean. The Dominican Republic, Jamaica, and Trinidad and Tobago import smaller amounts. In 2004 the Caribbean is projected to import a record 945,000 tons of rice, up 3 percent from a year earlier. Production for the region is projected at 635,000 tons, down from 660,000 tons a year earlier and well below the 1984/85 record of 809,000 tons. Cuba accounts for most of the long-term decline in rice production in the Caribbean. Cuba is projected to import a record 550,000 tons in 2004, up 50,000 tons from a year earlier and nearly double the levels imported prior to 1991/92. Rice production in Cuba is projected at 230,000 tons in 2003/04, virtually unchanged from 2002/03. Rice production was 50 percent larger in 1989/90 and has declined substantially since the mid-1980s. In 2004, Haiti is projected to import a near-record 300,000 tons, unchanged from a year earlier. Haiti’s imports have more than doubled since the early 1990s. Rising consumption and stagnant production are behind the larger imports. Haiti is an important market for U.S. rice, with U.S. food aid accounting for some of the country’s imports. The Dominican Republic is not projected to import any rice in 2004, down from 20,000 tons in 2003. Rice imports by the Dominican Republic have declined in the last few years due to bumper crops and a large buildup in stocks. Jamaica is projected to import 50,000 tons of rice in 2004, unchanged from a year earlier. Jamaica has imported 60,000-80,000 tons annually since the late 1980s. Jamaica does not produce any rice. Trinidad and Tobago is projected to import 45,000 tons of rice in 2004, unchanged from a year earlier. Rice imports by Trinidad and Tobago have been relatively stable since the mid-1990s. Trinidad and Tobago produce about 20,000 tons of rice annually. Brazil: Brazil is Latin America's largest rice importer. Brazil is projected to import 700,000 tons in 2004, down 400,000 tons from 2003 and well below the 1998 record of nearly 1.6 million tons. Brazil's 2003/04 crop is projected at 7.5 million tons, up more than 3 percent from a year earlier, the result of larger plantings. Production remains below the 1987/88 record of 8 million tons Rice consumption has exceeded production every year since 1988/89, making Brazil a major rice importer. Because of special trade arrangements under the MERCOSUR trade agreement, Argentina and Uruguay dominate the Brazilian market. In years when Argentina and Uruguay are unable to supply Brazil’s import needs, the United States typically ships substantial amounts to Brazil, mostly in the form of rough rice. Central America: The region is projected to import 455,000 tons in 2004, down 10,000 tons from the year-earlier record. Costa Rica accounts for all of the 2004 import decline. Costa Rica’ rice imports are projected to drop 25,000 tons to 100,000 tons. In contrast, Guatemala’s imports are projected to increase 5,000 tons to 75,000 and Honduras is projected to raise imports 10,000 tons to 100,000. Nicaragua’s imports are projected to remain unchanged at 100,000 tons, El Salvador’s to remain at 75,000 tons, and Panama’s to remain at 5,000 tons. Rice production in Central America is expected to drop about 1 percent to 528,000 tons in 2003/04, almost 9 percent below the 1997/98 record. Panama and Nicaragua are the largest rice producers in the region, accounting for nearly 70 percent of total production. Panama’s crop is projected to remain virtually unchanged from the 2002/03 level of 200,000 tons. Nicaragua’s crop is projected to decline 7 percent to 160,000 tons. Costa Rica is the only other significant producer in the region with production projected nearly unchanged in 2003/04 at 110,000 tons. Rice consumption in the region has steadily increased and is outstripping production. The United States supplies nearly all of the imported rice by the region. The bulk of Central America’s rice imports are rough rice, nearly all long grain. Other regions The EU: The EU is projected to import 875,000 tons in 2004, down 25,000 from this year and below the 2002 record of 959,000 tons. The EU imports mostly long grain rice--with the United States and Thailand the largest suppliers--as well as basmati rice from India and Pakistan. Northern Europe accounts for the bulk of EU rice imports. The EU imports substantial amounts of brown rice--rough rice with the hull removed but bran layer intact--that is then fully milled within the EU. The former Soviet Union (FSU): The countries of the former Soviet Union are projected to import 568,000 tons of rice in 2004, down 9 percent from a year earlier. Production in 2003/04 is projected at 837,000 tons, an increase of 21 percent from a year earlier but still only about half the size of the record 1988/89 crop. Russia is the largest market for rice in the former Soviet Union, with imports projected at 350,000 tons in 2003, down 50,000 tons from a year earlier. Russia’s rice production is projected at 322,000 tons in 2003/04, up slightly from last year but less than half the level produced in 1989/90. Ukraine is projected to be the second largest market for rice in the FSU in 2004, with imports projected at 75,000 tons, unchanged from 2003. At 50,000 tons, rice production in Ukraine in 2003/04 is unchanged from a year earlier but only about half the level produced in 1989/90. Uzbekistan is projected to import 50,000 tons of rice in 2004, unchanged from a year earlier. Rice production in Uzbekistan collapsed in 2000/01 and 2001/02, a result of the severe drought in the region. Production in 2003/04 is projected at 180,000 tons, up from 93,000 a year earlier but still a third smaller than the 1999/2000 crop. United States: Imports by the United States are projected at a record 470,000 tons in 2004, up 35,000 tons from a year earlier. Thailand accounts for about two-thirds of U.S. rice imports, shipping mostly jasmine rice. Basmati rice from India and Pakistan account for about 15 percent of total U.S. rice imports. Medium grain imports from Australia or China currently account for most of the remainder. Imports have expanded sharply in the United States over the past 25 years.