Rice YEARBOOK -- TEXT December 10, 2004 November 2004, ERS-RCS-2004 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 30, 2004. The complete report will be available electronically in about a month. ----------------------------------------------------------------------------- Rice Situation and Outlook Yearbook. Market and Trade Economics Division, Economic Research Service, U.S. Department of Agriculture, November 2004, RCS-2004. Contents Summary U.S. Outlook for 2004/05 Bumper Crop, Record U.S. Supplies Projected for 2004/05 U.S. 2004/05 Ending Stocks Projected To Be the Highest Since 1986/87 U.S. Rice Market Faces Record Supplies and Higher Global Prices Recap of 2003/04 U.S. Rice Market U.S. Season-Average Farm Prices Climbed 67 Percent on Smaller Supplies International Outlook for 2004/05 Global Trading Prices Rise on Tight Supplies, Thai Intervention Purchases Thailand, Vietnam, and India Are Projected To Ship Less Rice in 2005 Global Rice Imports Are Projected To Decline 4 Percent in 2005 Report Coordinator Nathan Childs (202) 694-5292 Economic Contributor 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 30, 2004. 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 Bumper Crop, Record Supplies Projected for 2004/05 U.S. Rice Market U.S. rice supplies are projected to increase 10 percent in 2004/05 to a record 265.8 million hundredweight (cwt) (rough basis), as a record harvest more than offsets a smaller carryin and a decline in imports. Long grain supplies are projected at 187.5 million cwt, up 7 percent from a year earlier. Combined medium/short grain supplies are projected at 77.4 million cwt, an increase of 17 percent and the largest since 1983/84. At 23.7 million cwt, beginning stocks of all rice are nearly 12 percent below a year earlier and the smallest since 1999/2000. Arkansas accounts for the bulk of the decline in beginning stocks in 2004/05. Imports are projected at 14.5 million cwt, 7 percent smaller than the year-earlier record. Medium/short grain accounts for all of the projected decline in 2004/05 U.S. rice imports. The 2004/05 (August-July) U.S. rice crop is forecast at a record 227.65 million cwt (rough basis), up 14 percent from a year earlier, a result of both increased plantings and a record yield. At 3.36 million acres, rice plantings are up more than 11 percent from a year earlier and are the largest since 1999/2000. The average yield is projected at 6,828 pounds per acre, up 3 percent from a year earlier and the fifth consecutive year of a record U.S. average field yield. Production is projected to be larger in 2004/05 for all three classes of U.S. rice--long, medium, and short grain. Rice acreage is projected larger in 2004/05 in all reporting U.S. rice growing States except Mississippi where area is virtually unchanged from a year earlier. Arkansas, California, and Louisiana account for the bulk of this year’s 11-percent increase in total rice harvested area, with California’s plantings one of the highest on record. Strong prices at planting were behind the 2004 U.S. rice area expansion. Field yields are projected higher for all reporting States in 2004 except Louisiana and Texas, with record yields projected for Arkansas, Mississippi, and Missouri. Rice production is projected larger this year in all reported States, with record crops projected for Arkansas and California. These two States account for the bulk of the projected increase in U.S. rice production in 2004. The 2004/05 U.S. season-average farm price (SAFP) is projected at $7.00 to $7.50 per cwt, compared with $7.49 a year earlier. The 2003/04 SAFP was up 67 percent from a year earlier and the highest since 1998/99. The price strength in 2003/04 was the result of a 9-percent decrease in U.S. supplies and slightly higher global trading prices. In 2004/05, downward price pressure from a bumper crop and record U.S. supplies will be somewhat offset by another year of stronger global trading prices. In 2004/05, the combination of tighter world rice supplies and higher prices for Thailand’s intervention purchases of rough rice from its growers are expected to push global trading prices higher than a year earlier. U.S. 2004/05 Ending Stocks Projected To Be the Largest Since 1986/87 Total U.S. rice use in 2004/05 is projected at 224 million cwt, up 3 percent from a year earlier and the second highest on record. Domestic use (consumption plus the residual which includes unreported losses in handling, processing, and marketing and any statistical errors) accounts for the bulk of the increase. Total domestic and residual use is projected to increase more than 4 percent to 119 million cwt. Although still increasing, the rate of growth in domestic consumption of rice (food uses, beer, and pet food) has slowed since the mid-1990s. Since 2001/02, growth in consumption has averaged less than 2 percent a year, down from 5 percent in the 1980s and 4 percent in the 1990s. U.S. rice exports in 2004/05 are projected at 105 million cwt (rough-equivalent of both rough and milled rice exports), up 1 percent from a year earlier. Exports are second only to the record 124.6 million cwt shipped in 2002/03. Record U.S. supplies and a much smaller price difference over Asian competitors are behind projections for increased U.S. rice exports in 2004/05. By type of rice, U.S. rough rice exports are projected to decline while combined milled and brown rice exports are projected to increase. By class, a fractional decline in long grain exports is projected to be more than offset by stronger medium/short grain exports. U.S. rough rice exports for 2004/05 are projected at 32 million cwt, down 7 percent from a year earlier and more than 25 percent below the 2002/03 record. Brazil accounts for most of the expected decline in U.S. rough rice exports in 2004/05. Combined milled and brown rice exports (on a rough basis) are projected at 73 million cwt in 2004/05, up more than 5 percent from a year earlier. A big boost in U.S. supplies, a much smaller price difference over Asian competitors, and a decline in exportable supplies in several major Asian rice exporting countries--as well as in Australia--are behind the projected increase in U.S. milled rice exports. U.S. ending stocks of all rice for 2004/05 are projected at 41.8 million cwt, up 77 percent from a year earlier and the largest since 1986/87. A 10-percent boost in total supplies is projected to more than offset a 3-percent increase in total use. A carryover of this magnitude will keep U.S. rice prices under substantial downward pressure for the remainder of the 2004/05 market year. The resulting stocks-to-use ratio is projected at 18.7 percent, up from 10.9 percent a year earlier and the highest since 1992/93. Long grain accounts for the bulk of the build-up in U.S. ending stocks. Long grain ending stocks are projected to increase 127 percent to 23.4 million cwt, the largest since 2001/02. The long grain stocks-to-use ratio is projected at 14.3 percent, up from 6.3 percent a year earlier. For medium/short rice, ending stocks for 2004/05 are projected at 17.4 million cwt, up 41 percent from a year earlier and the largest since 1986/87. The resulting medium/short grain stocks-to-use ratio is projected at 26 percent, up from 23 percent a year earlier and the largest since 1992/93. Tighter World Rice Supplies Push Global Trading Prices Higher in 2004/05 Global trading prices have increased 7 percent since the start of the 2004/05 market year in August and are the highest since March. In mid-November 2004, Thailand’s 100 percent Grade B (FOB vessel, Bangkok) was quoted at $262 per ton, up $12-$15 from a month earlier and $26 higher than prices quoted in June. The price increases this fall are due to tight exportable supplies in Asia and higher prices for Thailand’s intervention purchases of rough rice from its growers. Thailand began its intervention purchases of its 2004 main-crop on November 1, and purchases will continue through February when the main-crop harvest is over. Quotes for Vietnam’s rice have recently increased as well, a result of tight supplies and a full commitment to buyers of its 2004 export quota. From late 2000 through 2003 Thailand’s export prices were the lowest since the early 1970s. Not until China made large purchases of non-fragrant rice in early 2004 did global prices begin to rise. Prices declined during the spring as China delayed delivery of the purchased rice and renegotiated some contracts to stipulate a lower price. However, by mid-October 2004 trading prices began to rise on tighter global exportable supplies and announced higher prices for Thailand’s intervention purchases of rough rice. World rice production is projected at 398.3 million tons (milled basis) in 2004/05, up 2 percent from a year earlier, but still 3 percent below the 1999/2000 record of 408.7 million tons. China accounts for the largest share of the 2004/05 global production expansion. Despite the larger production, global rice supplies are projected to decline 3 percent in 2004/05, the third consecutive year of smaller global rice supplies. Global area harvested is projected at 149.7 million hectares, virtually unchanged from a year earlier, but 5.5 million hectares below the 1999/2000 record. Larger plantings in China are nearly offset by smaller plantings in South Asia and South America. At 3.96 tons per hectare, the average global rough rice yield is projected to be 2 percent above a year earlier and the highest on record. Despite this year’s projected record average field yield, yield growth since 1999/2000 has been negligible. Among the major rice exporters, production is projected to be higher in 2004/05 in China, the United States, and Pakistan. In contrast, production is projected to decline in Thailand, Vietnam, and India. Among the top Asian rice importers-- Indonesia, the Philippines, Malaysia, and Bangladesh--only the Philippines is projected to increase production in 2004/05, with a record rice crop forecast. For major non-Asian rice importers, record crops are projected in 2004/05 for Nigeria and Iran. Although Brazil’s 2004/05 production is projected to drop 9 percent from the year-earlier record, supplies are projected to be the highest on record. World rice consumption is projected at 412.4 million tons in 2004/05, fractionally below the year-earlier record. India accounts for most of the decrease. In addition, rice consumption is projected to slightly decline in 2004/05 in Japan, South Korea, and Taiwan--a long term trend in all three countries, a result of income-driven diet diversification. In contrast, record levels of consumption--including the residual, or unreported losses in processing and handling--are projected for China, the Philippines, Bangladesh, Thailand, Vietnam, and Brazil. Both Latin America (including Brazil) and Sub-Saharan Africa are projected to consume record amounts of rice in 2004/05 as well. With consumption exceeding production in 2004/05 by 14.1 million tons, global ending stocks are projected to drop nearly 17 percent to 71.4 million tons. This is the fourth consecutive year of declining global ending stocks and the lowest ending stocks since 1983/84. The global stocks-to-use ratio is projected at 17.3 percent, down from 20.7 percent a year earlier and the smallest since 1976/77. China accounts for the largest share of this year’s expected reduction in global ending stocks. China’s ending stocks have declined each year since 1999/2000 and are projected to be the lowest in more than 20 years in 2004/05. Global Rice Trade Is Projected To Decline 4 Percent in 2005 Global rice trade in 2005 is projected to decline 4 percent from a year earlier, the third consecutive year of declining global rice trade. Rice trade would be the smallest since 2000 and 12 percent below the 2002 record of 27.8 million tons. Declining Asian imports have accounted for the bulk of the weaker global rice trade since 2004. Record and near-record crops in major importing countries account for the decline in Asian rice imports. In 2005, weaker imports by China, the Philippines, Saudi Arabia, and South Africa are projected to more than offset larger imports by Indonesia, Nigeria, and Turkey. Among the top six rice exporting countries--Thailand, Vietnam, India, China, the United States, and Pakistan--only the United States and Pakistan are projected to increase shipments in 2005. Thailand’s exports are projected to drop sharply from the 2004 record. India and Vietnam are projected to export less rice in 2005 as well. Among the medium-sized exporters, Argentina, Australia, Burma, and Uruguay are projected to expand exports in 2005. Global rice trade in 2004 is forecast at 25.4 million tons, down almost 8 percent from 2003. In 2004, weaker imports by Bangladesh, Brazil, Indonesia, Nigeria, the Philippines, and Turkey more than offset greater imports by China, markets in the Caribbean, Iraq, Malaysia, Saudi Arabia, South Africa, and Sri Lanka. On the export side, big declines in exports from India, China, and the United States more than offset record exports from Thailand and larger shipments from Vietnam. U.S. Outlook for 2004/05 Bumper Crop, Record U.S. Supplies Projected for 2004/05 U.S. rice supplies are projected to increase 10 percent to a record 265.8 million hundredweight (cwt) in 2004/05, as record production more than offsets a smaller carryin and a decline in imports. At 23.7 million cwt, beginning stocks are nearly 12 percent below a year earlier and the smallest since 1999/2000. The total rice harvest of 227.65 million cwt is 14 percent larger than a year earlier, a result of both increased plantings and a record yield. At 14.5 million cwt, imports are 7 percent smaller than the year-earlier record. Long grain supplies, projected at 187.5 million cwt, are up 7 percent. Combined medium/short grain supplies are projected to increase 17 percent to 77.4 million cwt, the largest since 1983/84. U.S. 2004 Rice Crop Projected At a Record 227.7 Million Cwt The 2004/05 (August-July) U.S. rice crop is forecast at a record 227.65 million cwt (rough basis), up 14 percent from a year earlier, a result of both increased plantings and a record yield. At 3.36 million acres, rice plantings are up more than 11 percent from a year earlier and the largest since 1999/2000. The average yield, projected at 6,828 pounds per acre, is up 3 percent from a year earlier and is the fifth consecutive year of a record U.S. average field yield. Long grain accounts for the largest share of this year’s increase in rice production. U.S. long grain production is projected at 166.9 million cwt, up 12 percent from a year earlier and the second highest on record. Nearly all U.S. long grain rice is grown in the South. Medium grain production is projected at 57.4 million cwt, an increase of 21 percent from a year earlier, with California--where most of the U.S. medium grain crop is grown-- accounting for nearly all of the increase. Short grain production, accounting for 1-2 percent of the total U.S. rice crop, is projected at 3.39 million cwt, up 25 percent from 2003/04. California produces nearly all U.S. short grain rice, and much of this crop is exported to Japan. Strong prices at planting--especially for California medium grain rice--and generally good weather across most producing regions in the United States were responsible for the 342,000-acre increase in U.S. rice plantings in 2004/05. In 2003/04, a 9-percent decrease in total rice supplies--a result of a smaller crop and big decline in beginning stocks--boosted U.S. prices substantially, driving the 2004 area expansion. U.S. Average Field Yield Projected At Record 6,828 Pounds Per Acre In early November, the U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS) forecasted average field yields for 2004/05 at a record 6,828 pounds per acre, up 183 pounds from a year earlier and the fifth consecutive year of a record average yield. Expanded plantings of new, higher yielding long grain varieties in the South, plus generally favorable weather across most U.S. rice growing regions-- especially the Mississippi Delta and California--during critical growing months are behind the 2004 record U.S. yield. Annual yield growth has averaged about 2 percent since 2000/01, after being virtually stagnant from 1988/89 to 1999/2000. Several new higher-yielding varieties have been released for commercial use in the South over the past half-decade. These new long grain varieties include: Cocodrie, Wells, Francis, Priscilla, Lagrue, and Arhent. More recently, herbicide-resistant Clearfield varieties have been released in the South as an effective means to fight red rice problems. Red rice is weed that competes with rice for sunshine and nutrients. Except for the Clearfield varieties, most herbicides that kill red rice will kill the commercially planted rice as well. Field yields are projected higher this year for all reporting States except Louisiana and Texas, with record yields projected for Arkansas, Mississippi, and Missouri. The Arkansas average field yield is projected at 6,800 pounds per acre, up 3 percent from last year. Mississippi’s average yield is forecast at 6,900 pounds, an increase of almost 2 percent from 2003. At 6,400 pounds per acre, Missouri’s rice yield is up 4 percent from a year earlier. California’s 2004 field yield is estimated at 8,400 pounds per acre, an increase of 10 percent from a year earlier and the highest in a decade. Fields yields in California are projected to fractionally below the record 8,500 pounds per acre achieved in 1991, 1992, and 1994. For Louisiana, field yields for 2004 are forecast at 5,350 pounds per acre, down 9 percent from the year earlier record and the lowest since 2000. The average yield in Texas is forecast at 6,600 pounds per acre, although unchanged from 2003, the yield is 500 pounds below the 2002 record. Both Louisiana and Texas experienced severe rain and wind at planting this year that adversely affected field yields. Rice Production Projected To Increase In 2004 in All Reporting States Rice acreage is projected larger in 2004/05 in all reporting U.S. rice growing States except Mississippi where area is virtually unchanged from a year earlier. Arkansas, California, and Louisiana account for the bulk of this year’s 11-percent increase in total rice harvested area, with California’s plantings one of the highest on record. In Arkansas--the largest rice growing State in the United States- -harvested area is projected at 1.56 million acres, up 105,000 acres from a year earlier. Area is still below the 1999 record of 1.63 million acres. California’s harvested area is projected at 600,000 acres, an increase of 93,000 acres from a year earlier. In Louisiana, harvested area increased 80,000 acres to 530,000 acres. Despite the 18-percent increase, harvested acreage in Louisiana remains below levels reported in 2001 and 2002. In 2003, extremely low prices led to a 16-percent reduction in Louisiana rice acreage to 450,000 acres, the smallest since 1987. At 217,000 acres, harvested area in Texas is up 21 percent from a year earlier and the largest since 1999. Despite the increase, rice acreage in Texas remains below the record of almost 600,000 acres reported in 1968. Missouri’s rice acreage is projected at 194,000 acres, an increase of 23,000 acres from a year earlier and the second highest on record. High soybean prices at planting and some red rice problems in major growing areas keep Missouri’s rice acreage below the 2002 record of 206,000 acres. In contrast, Mississippi’s rice acreage declined 1,000 acres to 233,000 acres in 2004. High soybean prices at planting kept rice acreage virtually flat in Mississippi in 2004. Rice production is projected larger this year in all reported States, with record crops projected for Arkansas and California. Arkansas and California account for the bulk of the projected increase in U.S. rice production in 2004. Production increases in other States are much smaller. The 2004 Arkansas crop is projected to increase 11 percent to a record 106.1 million cwt, a result of both the larger plantings and a record yield. California’s rice crop is projected at a record 50.4 million cwt, up 31 percent from a year earlier, a result of both increased plantings and a record yield. California’s rice crop was impacted by adverse weather in 2003--a cold, wet spring followed by an extremely hot summer--that cut production 10 percent from a year earlier. Louisiana’s rice production is projected at 28.4 million cwt, an increase of more than 7 percent from a year earlier, a result of an 18-percent increase in acreage. In Mississippi, rice production is projected at 16.1 million cwt, up 1 percent from a year earlier, a result of a record yield. At a record 12.4 million cwt, Missouri’s rice production is more than 18 percent larger than a year earlier and just fractionally below the 2001 record. Expanded plantings are responsible for most of the increase this year. Total U.S. Rice Supplies Projected To Increase to a Record 265.8 Million Cwt Total U.S. rice supplies in 2004/05 are projected at a record 265.8 million cwt, up 10 percent from a year earlier. A record harvest more than offset a smaller carryin and a projected decrease in imports. Based on data from NASS reported in the August 2004 Rice Stocks, beginning stocks for 2004/05 are estimated at 23.7 million cwt, down almost 12 percent from a year earlier and the smallest since 1999/2000. Arkansas accounted for the bulk of the decline in beginning stocks in 2004/05. In contrast, beginning stocks in California on August 1 were up 22 percent from a year earlier, despite the substantial decline in production in 2003. U.S. rice imports for 2004/05 are projected at 14.5 million cwt, down 7 percent from the year earlier record and first decline since 1999/2000. Combined medium/short grain rice accounts for all of the expected decline in 2004/05 U.S. rice imports. Puerto Rico--the largest U.S. territory--purchases the bulk of U.S. medium/short grain imports. China supplied nearly all of this rice in 2003/04 when it sold about 114,000 tons of medium/short grain rice to Puerto Rico. In 2002/03 China and Australia together shipped a total of 77,500 tons of medium/short grain rice to Puerto Rico, about evenly split between the two exporters. In 2001/02 Australia shipped more than 62,000 tons of medium/short grain rice to Puerto Rico. Neither China nor Australia supplied much rice to the United States or its territories prior to 2001/02. Italy regularly exports small quantities of Arborio rice--a high-quality medium/grain specialty rice--to the United States. Egypt ships extremely small amounts of its high-quality medium/short grain rice to the United States as well. Excluding the medium/short grain shipments, nearly all U.S. rice imports are specific aromatic (or fragrant) 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 rice from India and Pakistan. U.S. rice breeders are currently trying to develop substitutes for these specific Asian aromatic varieties. Total U.S. rice imports have increased sharply since 1980/81 and have more than doubled since 1993/94. Imports now account for 12- 14 percent of total domestic use (excluding seed use) of rice. Much of this growth has been driven by increases in the Asian- American population over the past 25 years. USDA’s long-term baseline forecast for rice projects imports to continue to increase at a faster pace than domestic consumption, thus accounting for a growing share of the U.S. market. Total supply of long grain rice--the dominant class of rice grown in the United States--is projected to increase more than 7 percent in 2004/05 to 187.5 million cwt. A larger crop and record imports are projected to more than offset a big decline in carryin. Long grain imports are projected at a record 10.25 million cwt, an increase of almost 5 percent from 2003/04. The 166.9-million-cwt long grain crop is 17.9 million cwt larger than a year earlier and the second largest on record. In contrast, data from the August 2004 Rice Stocks report indicated long grain stocks at the beginning of the 2004/05 market year at 10.3 million cwt, more than 34 percent below a year earlier. For medium/short grain rice, supplies in 2004/05 are projected to increase 17 percent to 77.4 million cwt, the largest since 1983/84. A larger crop and a big increase in beginning stocks more than offset the decline in imports. Data from the August 2004 Rice Stocks report indicate beginning stocks of medium/short grain rice at 12.4 million cwt, up 33 percent from a year earlier. At 60.8 million cwt, the combined medium/short grain crop is 21 percent above a year earlier and the largest since 2000/01. In contrast, imports of medium/short grain rice are projected to decline nearly 27 percent from the year-earlier record to 4.25 million cwt. Reduced shipments from China to Puerto Rico are expected to account for nearly all of the decline in U.S. medium/short grain imports. U.S. 2004/05 Ending Stocks Projected To Be the Highest Since 1986/87 Total U.S. rice use in 2004/05 is projected at 224 million cwt, up 3 percent from a year earlier and the second highest on record. Domestic use (including the residual or unreported losses and statistical errors) accounts for the bulk of the increase. Total domestic and residual use is projected to increase more than 4 percent to 119 million cwt. U.S. exports are projected at 105 million cwt, up 1 percent from a year earlier and the second highest on record. A 7-percent decline in rough rice exports is projected to be offset by increased exports of milled and brown rice. Medium/short grain accounts for all of the increase in total use. Combined medium/short grain total use is projected to increase 12 percent to 60 million cwt. Total long grain use is projected at 164 million cwt, virtually unchanged from 2003/04. Ending stocks of total rice are projected at 41.7 million cwt, an increase of 77 percent from a year earlier and the largest since 1986/87. Long grain accounts for the bulk of the increase in ending stocks. Total Rice Use in 2004/05 Is Projected To Increase 3 Percent Total rice use--domestic and residual plus exports--in 2004/05 is projected at 224 million cwt, up 6.2 million cwt from a year earlier and the second highest on record. Domestic and residual use accounts for most of the projected increase. Total domestic use--including the residual, or unreported losses in transporting, processing, and marketing plus any statistical errors--is projected to increase more than 4 percent to 119 million cwt in 2004/05. Food, industrial, and residual is projected at 115 million cwt, up nearly 5 percent from 2003/04. Seed use is projected to decline more than 3 percent to 4 million cwt. Annual rice consumption in the United States increased sharply from the late 1970s through the mid-1990s. From 1980/81 through 1995/96, growth in total U.S. rice consumption (including consumption by U.S. territories but excluding seed use) averaged almost 5 percent a year. A big increase in the Asian-American and Hispanic-American populations, introduction of several new rice- based food products, and marketing efforts by the rice industry were behind much of this growth. Although still increasing, the rate of growth has slowed since the mid-1990s. From 1995/96 through 2000/01, growth in U.S. rice consumption averaged about 3 percent a year. Since 2001/02, annual growth has averaged less than 2 percent a year. Fewer meals fixed at home, and a premium on meal preparation time, have contributed to the slowing of the growth in U.S. rice consumption that began nearly a decade ago. More recently, a shift to protein diets and away from carbohydrates--such as bread, rice, and pasta--by some consumers also contributed to the weaker expansion in rice consumption. 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 almost 27 pounds (not including U.S. territories). Since 2000/01, per capita consumption has grown about one-third pound a year, down from a half pound a year in the 1990s and nearly a pound a year in the 1980s. U.S. Rough Rice Exports Projected To Decline in 2004/05… U.S. rice exports in 2004/05 are projected at 105 million cwt (rough equivalent of both rough and milled rice exports), up 1 percent from a year earlier. Exports are second only to the record 124.6 million cwt shipped in 2002/03. In 2002/03, Brazil imported almost 328,000 tons of U.S. rice, almost all long grain rough rice. Record U.S. supplies and a much smaller price difference over Asian competitors are behind expectations of increased U.S. rice exports in 2004/05. By type of rice, U.S. rough rice exports are projected to decline while combined milled and brown rice exports are projected to increase in 2004/05. By class, a fractional decline in long grain exports is projected to be offset by stronger medium/short grain exports. U.S. rough rice exports for 2004/05 are projected at 32 million cwt, down 7 percent from a year earlier and more than 25 percent below the 2002/03 record. Brazil accounts for most of the expected decline in U.S. rough rice exports in 2004/05. Brazil imported 214,600 tons of U.S. rough rice in 2003/04 and imported more than 325,000 tons in 2002/03, all southern long grain in both years. The United States is not expected to ship much rice to Brazil in 2004/05, a result of ample supplies within the MERCOSUR trading region. It is unlikely that the United States can fully offset the loss of rough rice shipments to Brazil with greater shipments to its core rough rice markets of Mexico and Central America. Southern long grain accounts for the bulk of U.S. rough rice exports, with most of this rice going to Latin America, with Mexico and Central America the largest buyers. Shipments to these two regular buyers typically increase each year. The United States supplies nearly all rice imports to both Mexico and Central America. These two importers typically buy very small amounts of U.S. milled rice as well as U.S. rough rice. In addition, 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 exit the U.S. market when rice supplies are plentiful in South America. Some of the Andean countries will also import large amounts of U.S. rice, nearly all southern long grain rough rice, when South American supplies are tight. Like Brazil, the Andean countries buy very little U.S. rice in years of strong South American harvests. Since 2001/02, Cuba has imported significant amounts of U.S. rice as well, often taking rough rice. However, in 2003/04 Cuba’s imports from the Unite States were mostly milled rice. Price competitiveness of U.S. rice, the level of Cuba’s rice needs, and Cuba’s ability to finance purchases of U.S. rice are major factors behind Cuba’s decisions to purchases U.S. rice. The European Union--mostly Spain and Italy--typically import small amounts of U.S. rough rice each year, mostly long grain. 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 imports of U.S. rice declined sharply in 2003/04 when Turkey instituted a ban on imports in September 2003. In the summer of 2004 Turkey replaced the outright ban on imports with an ‘absorption policy’ whereby for every ton of rice imported one ton of rice had to be purchased from domestic stocks. This restriction is expected to remain in effect through December 2004. The Unite States is the only major rice exporter that allows rough rice exports. Rough rice has become a much larger share of U.S. exports over the past 15 years, and now accounts for more than a third of total exports (on a rough basis). 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 government support to their producers. Most countries in Latin America prefer to import rough rice instead of milled rice to keep their mills operating at full capacity (lowest per-unit cost) and to avoid competition with domestic milled rice. Many Latin American countries have rice milling capacity that exceeds current rough rice production levels. To encourage rough rice imports, most countries in the region maintain a lower tariff on rough rice imports than on milled rice imports. 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, in some years, shipped rough rice to Turkey. …While Milled Rice Exports Are Projected To Increase Combined milled and brown rice exports (on a rough basis) are projected at 73 million cwt in 2004/05, up more than 5 percent from a year earlier. A big boost in U.S. supplies, a much smaller price difference over Asian competitors, and a decline in exportable supplies in several Asian exporting countries--as well as in Australia--are behind the projected increase in U.S. milled rice exports. The price difference over similar grades of rice from Thailand--a major competitor of the United States in Sub-Saharan Africa and parts of the Middle East--has declined from about $180 per ton in June to less than $70 by mid-November. U.S. rice has historically been competitive with Thailand’s rice when the premium did not exceed $50 per ton. Among major competitors, China, India, and Australia all had relatively tight exportable supplies going into the 2004/05 market year. In calendar year 2005, Thailand will face tighter supplies due to record shipments in 2004. Supply constraints will limit Vietnam’s exports in 2005 as well. Northeast Asia and the EU 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’ World Trade Organization (WTO) commitments. The United States is likely to increase exports and raise its market share in this region in 2004/05. Its main competitors--China and Australia--have tight exportable supplies, especially Australia. None of the three Northeast Asian importers is expected to purchase more than their minimum WTO import requirements. The EU purchases mostly brown rice from the United States that is fully milled in Europe. The EU also purchases much smaller quantities of fully milled rice from the United States, mostly under a tariff-rate quota (TRQ) to compensate suppliers for the accession of Finland, Austria, and Sweden into the EU in 1995. The EU changed its rice policy on September 1, 2004. It eliminated using a ‘margin of preference’ for calculating duties on imported brown and milled rice and instead will assess fixed duties on all forms of imported rice. Both India and Pakistan-- who export mostly basmati brown rice to the EU--were granted duty abatements under the new policy. It is not clear yet how this new policy will affect EU import levels or U.S. competitiveness in the market. The Middle East and Sub-Saharan Africa are also major markets for U.S. milled rice. Over the past decade, the United States has lost substantial market share in this region--especially in Saudi Arabia and the Republic of South Africa--to Asian suppliers. Thailand and India have substantially increased market share in these two countries, mostly due to lower prices. Both countries purchase high-quality parboiled rice, all long grain. The United States is expected to be more price competitive in these two high-quality markets in 2004/05. The Caribbean--mostly Haiti--is another major market for U.S. milled rice. The Dominican Republic and Jamaica are also important markets for the United States in this region. Cuba sometimes imports U.S. milled rice, although more often purchases rough rice. U.S. shipments to the Caribbean increased 28 percent in 2004/05, and were the highest on record. The region experienced weather-related production difficulties in 2003/04, necessitating large imports. Despite a locational advantage for the United States, Thailand has successfully competed in the Caribbean when the U.S. price difference is wide. South American exporters often ship small amounts of rice into the Caribbean as well. The United States is the largest supplier of rice to Canada, accounting for more than two-thirds of Canada’s annual rice imports, all milled or brown rice. Aromatic rice accounts for the bulk of Canada’s imports of Asian rice. In some years, Southeast Asia--primarily the Philippines and Indonesia--imports U.S. milled rice. These shipments are almost all non-commercial sales, including Title I of the PL 480 Program. The United States occasionally ships some milled rice--nearly all food aid--to Central Asia as well. Eastern Europe and non-EU Western Europe import small amounts of U.S. milled rice also. These two regions are relatively minor rice consumers and are expected to have little impact on global or U.S. export levels. Although a relatively small import market, this year Oceania has substantially increased its purchases of U.S. rice, nearly all medium/short grain milled rice. Australia has typically supplied this market, with the United States shipping very small amounts to the region. However, Australia’s rice supplies are extremely tight after consecutive weak harvests since 2002/03. This is the main factor behind the strong growth in U.S. sales and shipments to this small import market in 2004/05. Top buyers in Oceania include Papua New Guinea, Micronesia, and Samoa. U.S. Medium Grain Exports Are Projected To Increase in 2004/05 Medium/short grain accounts for all of the projected increase in total rice use in 2004/05. Total use of medium/short grain rice is projected at 60 million cwt, up 12 percent from a year earlier and the largest since 1996/97. Both exports and domestic use are projected higher in 2004/05. Domestic use of medium/short grain rice--including the residual-- is projected to increase 14 percent to 35 million cwt in 2004/05. It is expected that some industrial and processed food users will switch to medium/short grain rice from long grain as medium/short grain prices drop substantially in 2004/05. Substitution among classes of rice for direct food use (also called table rice) is unlikely. In addition, the California rice industry is expected to re-take some of the Puerto Rican market lost to China, a result of lower U.S. rice prices and very high Asian freight rates. Medium/short grain exports in 2004/05 are projected to increase 9 percent from a year earlier to a near-record 25 million cwt. Japan, South Korea, Taiwan, and Turkey are expected to account for the bulk of U.S. medium grain exports in 2004/05. Jordan and Oceania are expected to import smaller amounts. Tight supplies in Australia--a major competitor of the United States in the global medium/short grain market, lower U.S. prices, and much larger U.S. supplies are behind the expectation of stronger U.S. shipments in 2004/05. Japan, Turkey, and Jordan have been major buyers of U.S. medium/short grain rice each year since at least the mid-1990s. South Korea returned as a buyer of U.S. rice in 2001 and Taiwan began buying U.S. rice in 2002. Except for Japan’s 1994 emergency imports, all rice imports by the three Northeast Asian countries have been part of their WTO commitments. Japan and South Korea began importing rice under the WTO in 1995. Taiwan began importing under the WTO in 2002. Japan is the largest global importer of medium/short grain rice and the biggest market for U.S. medium/short grain rice. 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 rice imports are not scheduled to increase beyond the current level of 682,000 tons (milled basis) 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 increased annually from 51,000 tons (milled basis) in 1995 to 205,000 tons in 2004. South Korea’s minimum access imports will remain at the 2004 level until a new agreement is reached. Taiwan agreed to a minimum access import level for rice in 2002 of 127,400 tons (milled basis) as a requirement for joining the WTO. In 2003, Taiwan imported about the same amount of rice as a year earlier, this time as part of a TRQ. Taiwan will likely take the same amount of rice in 2004. Taiwan and South Korea’s future import requirements are being negotiated. Turkey has been a major market for U.S. medium grain rice since the mid-1980s. Over the last decade, Turkey has shifted from being mostly a milled rice market for the United States to being nearly a total rough rice market. Turkey is currently protecting its producers--who just harvested a record crop--from imported rice. Jordan, a market for U.S. rice for nearly 25 years, is the smallest of the regular commercial markets for U.S. medium grain rice. Jordan imports nearly all milled rice. The country does not grow rice. The United States will likely pick up sales in 2004/05 to various countries in Oceania, a region typically supplied by Australia. As of mid-November, U.S. sales and shipments to the region--a very minor global importer of rice--were up considerably from a year earlier. Central Asia has occasionally imported medium grain U.S. rice, virtually all under U.S. food aid programs. In both 2001/02 and 2002/03, Uzbekistan imported 55,000-60,000 tons of U.S. medium rice. None was shipped in 2004/05. Uzbekistan is unlikely to purchase any U.S. rice in commercial markets. Total long grain use is projected at 164 million cwt, virtually unchanged from a year earlier. Stronger domestic use (including the residual) is expected to be offset by a fractional drop in exports. Total domestic use (including residual) of long grain rice is projected at 84 million cwt, up almost 1 percent from a year earlier. In contrast, long grain exports are projected to decline 1 percent to 80 million cwt in 2004/05. A decline in U.S. long grain rough rice exports is projected to more than offset increased shipments of U.S. long grain milled rice. Expectations that Brazil will not purchase significant amounts of U.S. rice in 2004/05 are behind the projected decline in U.S. rough rice exports. Record U.S. supplies and a much smaller price difference over Thailand are behind expectations of expanded exports of U.S. long grain milled rice in 2004/05. The United States is expected to pick up market share in 2004/05 in price-sensitive markets like the Middle East and Sub-Saharan Africa. Saudi Arabia, Ghana, and Cote d’Ivoire are major commercial markets for U.S. long grain milled rice in these two regions. Thailand and India are major U.S. competitors. The largest market for U.S. long grain milled rice (including brown rice) is the EU. It is unclear at this time how the EU’s new rice policy will affect U.S. competitiveness in this market. Haiti and Canada are two other major markets for U.S. long grain milled rice. Several smaller Caribbean markets also take U.S. long grain milled rice. Rough rice shipments to Latin America-- mostly Mexico and Central America--account for the remaining exports of U.S. long grain rice. The U.S. faces little competition from Asian suppliers in the rough rice market. U.S. 2004/05 Ending Stocks Projected To Be the Largest Since 1986/87 U.S. ending stocks of all rice for 2004/05 are projected at 41.8 million cwt, up 77 percent from a year earlier and the largest since 1986/87. A 3-percent increase in total use was more than offset by a 10-percent boost in total supplies. A carryover of this magnitude will keep U.S. rice prices under substantial downward pressure for the remainder of the 2004/05 market year. The resulting stocks-to-use ratio is projected at 18.7 percent, up from 10.9 percent a year earlier and the highest since 1992/93. Long grain accounts for the bulk of the build-up in U.S. ending stocks. Long grain ending stocks are projected to increase 127 percent to 23.4 million cwt, the largest since 2001/02. The combination of a more than 7-percent increase in total supplies and near-steady total use was responsible for the build-up in stocks. The long grain stocks-to-use ratio is projected at 14.3 percent, up from 6.3 percent a year earlier. For medium/short rice, ending stocks for 2004/05 are projected at 17.4 million cwt, up 41 percent from a year earlier and the largest since 1986/87. A 17-percent increase in medium/short grain supplies more than offset a 12-percent rise in total medium/short use. This level of carryover will keep U.S. medium/short grain prices under substantial downward pressure throughout the 2004/05 market year. The resulting medium/short grain stocks-to-use ratio is projected at 26 percent, up from 23 percent a year earlier and the largest since 1992/93. U.S. Rice Market Faces Record Supplies and Higher Global Prices The U.S. season-average farm price for 2004/05 is projected at $7.00-$7.50 per cwt, compared with $7.49 a year earlier. Monthly reported rough rice cash prices began to decline in September after increasing each month since March as U.S. supplies tightened and farmers held off marketing the 2004 crop. Through mid-October, monthly weighted cash prices for 2004/05 averaged $8.45 per cwt. Prices are expected to drop during the remainder of the marketing year, a result of a bumper U.S. harvest and record domestic supplies. However, the U.S. price decline will be tempered by stronger world prices, a result of tighter global supplies and higher prices for intervention purchases of rough rice by the Government of Thailand. Total U.S. food aid purchases (including Title I sales) in fiscal 2004 are estimated at 223,300 tons, down from 309,500 tons a year earlier. U.S. 2004/05 Season-Average Farm Price Projected at $7.00 to $7.50 Per Cwt The 2004/05 U.S. season-average farm price (SAFP) is projected at $7.00 to $7.50 per cwt, compared with $7.49 a year earlier. The 2003/04 SAFP was up 67 percent from a year earlier and the highest since 1998/99. The bullish prices in 2003/04 were primarily due to a 9-percent drop in U.S. supplies and slightly higher global trading prices. In 2004/05, U.S. prices will be under downward pressure from a bumper crop and record U.S. supplies. However, these bearish factors will be partially offset by stronger global trading prices--a result of tighter world supplies and higher prices for this year’s intervention purchases of rough rice by the Government of Thailand. Through mid-October 2004, the weighted-average of U.S. monthly reported cash prices-- including remaining 2003-crop sales--was $8.45 per cwt, well above the projected SAFP for 2004/05, indicating U.S. prices will drop during the remainder of the market year. Average U.S. monthly reported cash prices for rough rice increased from March 2004 through August, as supplies of 2003- crop tightened and, by late summer, farmers held off selling the 2004-crop rice. In October 2004, USDA estimated the mid-month average cash price at $8.24 per cwt, down from $8.38 in September and $8.85 in August. Despite the recent declines, U.S. monthly cash prices have been above a year earlier every month since December 2002. Two consecutive years--2002/03 and 2003/04--of declining U.S. production, plus higher global prices--especially in 2004, were behind the nearly 2-year rise in U.S. prices. Price quotes for U.S. long grain rough rice are down from quotes in June 2004, a result of a record long grain harvest this year. Based on data from the weekly Creed Rice Market Report, average quotes for long grain rice increased from about $6.25 per cwt at the start of the 2003/04 market year in August, to $10.50-$10.75 by early June 2004. By July, few supplies of 2003 long grain rice remained in farmers’ hands, and there was little selling by farmers of any available rice. Early-season quotes for 2004-long grain rice in Texas and Louisiana--which begin the U.S. harvest in mid-July--were around $8 per cwt in late July. In late September, first quotes for 2004-crop long grain rice in the Delta--which reaches peak harvest in September--were $6.75-$7.00 per cwt. By mid-November, with the southern harvest over, rough rice prices in Texas and Louisiana had dropped to $7.65-$7.75 per cwt, while in the Delta prices were quoted at $6.75 per cwt. In both regions prices dropped only slightly during the harvest period. Rising world prices, and a reluctance of farmers to sell, limited the decline in U.S. prices in the fall of 2004 despite near- record long grain production. There have been few reported price quotes for 2004-crop California medium grain rough rice. Nearly all of the California crop is sold under a ‘pooling’ method of marketing. Under a pooling method of marketing, where rice is co-mingled within the same variety, rough rice prices are determined by the prices for milled rice. Thus, actual rough rice prices are not determined until after the end of the market year when all of the milled rice has been sold. Producers typically receive a partial payment up front, followed by subsequent payments over the next year. In 2003/04, farm prices for California medium grain rose sharply, reaching $12.75 per cwt by March 2004, the highest in a decade. The high prices were primarily due to a 10-percent drop in California production in 2003/04. California prices dropped slightly in April and May on indications of a big area expansion in California in 2004 and a slowdown in export sales of California rice, especially to Turkey which had placed a ban on imported rice. More information on California rough rice prices in 2004/05 will become available when Japan makes its substantial WTO purchases later this fall. Indications from early 2004/05 sales to Japan, Taiwan, and South Korea are for a significant price decline in 2004/05. In the South, medium grain prices were quoted around $6.75 per cwt in mid-November, down from about $9.00 a year earlier, a result of the record medium grain harvest in California. More than 80 percent of the U.S. medium grain crop is grown in California. Southern growers did not expand medium grain acreage in 2004, despite high prices in 2003/04. Much of the southern medium grain crop is used in processed foods and for industrial uses such as beer. Processors of some products--such as beer and pet food--can substitute between long and medium grain rice based on relative prices. Little southern medium grain rice is typically exported. However, some importers--such as Turkey--will take southern medium grain rice when California supplies are tight. Marketing Loan Gains for 2004/05 Averaged $.70 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. The adjusted world price is also reported by class. The payment rate is the difference between the adjusted world price (reported by USDA every Tuesday) and the loan rate. 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 2004, the 2004/05 payment rate for all rice has averaged $.70 per cwt (simple weekly average), down from a $2.60-weighted-average in 2003/04 and the lowest since July 1999. World prices have risen sharply, especially since early 2004, substantially reducing the payment rate. Much stronger imports by China, plus a general tightening of global exportable supplies, have been major factors boosting international prices in 2004. 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 25 cents 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 market year 1999/2000, the average payment rate weighted by marketings was $1.94 per cwt. Payment rates continued to rise throughout 2000/01 as the adjusted world price declined. From May through July 2001, the adjusted 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 was $3.69 for long grain, $3.67 for medium, and $3.55 for short grain. This is the highest payment rate for long grain rice since the summer of 1987 and the highest payment rate on record for medium and short grain rice. The payment rate (weighted by marketings) averaged $3.12 per cwt for the 2000/01 August-July market year. Despite a slight strengthening of the adjusted world price in 2001/02, the weighted-average payment rate actually rose 26 cents to $3.38 per cwt for 2001/02. For 2002/03, the average payment rate dropped fractionally to $3.33 per cwt. The average adjusted world price in 2002/03 was $3.28 per cwt, 5 cents below a year earlier. The payment rate has been declining since early May 2003 when world prices started increasing, primarily due to tighter global export supplies, especially in India where a weak monsoon severely cut 2002/03 production. China’s supply situation was tightening as well, as production had contracted a fifth consecutive year. From a payment rate of $3.43 per cwt in early May 2003, the rate had declined to $2.54 by the start of the 2003/04 market year in August. The rate was nearly stable until last December when world prices started moving higher and the payment rate began dropping again. By mid-March 2004, the weekly rate was below $2 per cwt for the first time since February 2000. In early 2004, China began to purchase non-fragrant milled white rice in the global market for the first time since the mid-1990s, a major factor driving global prices higher last winter and spring. By early May 2004, the average payment rate was less than $1 per cwt, the lowest since July 1999. For market year 2003/04, the weighted-average payment rate was $2.52 per cwt. In October 2004, global prices increased in anticipation of Thailand’s 2004 main-crop rough rice intervention purchases. By mid-November, the payment rate was less than 50 cents per cwt. Thailand announced it would purchase up to 9 million tons of rough rice from its growers between November and the end of February. The purchase prices are higher than a year earlier. The objective of Thailand’s intervention purchases is to support rice prices. U.S. Food Aid Purchases for Rice Declined 28 Percent in FY 2004 Total U.S. food aid purchases for rice for fiscal 2004 (October 2003 to September 2004) are estimated at 223,300 tons, down 86,200 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 rice was purchased for donation. Shipment dates may not necessarily fall within the same fiscal year as the rice was purchased. Food aid accounted for 6 percent of total U.S. rice exports in fiscal 2004, down from 7 percent a year earlier. In fiscal 2003, total U.S. food aid purchases (including Title I sales) totaled 309,500 tons, down from 355,900 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 2004, total purchases under PL 480 Title I (concessional sales) totaled 58,200 tons, down from 117,800 tons a year earlier. The Philippines was the only Title I recipient in fiscal 2004, purchasing 58,200 tons. Total purchases under PL 480 Title II, or food donations, accounted for 71,200 tons in fiscal 2004, down from 144,700 tons in fiscal 2003. Indonesia was the largest recipient of Title II donations in fiscal 2004, taking 15,180 tons. Other recipients of Title II donations in fiscal 2004 receiving at least 3,000 tons were: Benin, Burkina Faso, Guatemala, Madagascar, Mozambique, Niger, Sierra Leone, Somalia, Sri Lanka, and the United Arab Emirates. In addition, about 64,500 tons of rice was purchased in fiscal 2004 under the Food for Progress program, up from 46,900 tons in fiscal 2003. At 15,000 tons, Indonesia was the largest recipient in fiscal 2004. Cote d’Ivoire ranked second receiving 12,000 tons. Nigeria, Senegal, and Cameroon each received 10,000-11,000 tons. There were no Section 416(b) allocations or purchases in fiscal 2004. Finally, purchases under the Food for Education program totaled 29,400 tons in fiscal 2004. Cote d’Ivoire, Ghana, Mozambique, Cambodia, Afghanistan, Guatemala, and Cameroon accounted for most of the purchases in fiscal 2004. In fiscal 2003, Title I purchases for rice totaled 117,800 tons, down 68,000 tons from a year earlier. The Philippines accounted for all of the Title I sales in fiscal 2003. In addition, about 144,700 tons of rice was purchased in fiscal 2003 under PL 480 Title II, up 89,300 tons from a year earlier. Major recipients of Title II purchases in fiscal 2003 were Indonesia (54,600 tons), Iraq (47,300 tons), Honduras (8,160 tons), Benin (8,110 tons), North Korea (5,000 tons) and Niger (4,580 tons). U.S. rice purchased under the Food for Progress program totaled 46,900 tons in fiscal 2003, up from 27,400 tons a year earlier. Cameroon was the largest recipient, receiving 21,000 tons. Uzbekistan ranked second, receiving 10,000 tons. Although 23,700 tons of rice was programmed in fiscal 2003 under the Food for Education program, no purchases under this program occurred between October 2002 and September 2003. Nearly all of this rice was purchased under the Food for Education program in early fiscal 2004. There were no Section 416(b) allocations or purchases in fiscal 2003, compared with 56,000 tons purchased in fiscal 2002. Recap of 2003/04 U.S. Rice Market U.S. Season-Average Farm Prices Climbed 67 Percent on Smaller Supplies U.S. rice supplies contracted 9 percent to 241.5 million cwt (rough basis) in 2003/04, as a big drop in beginning stocks and a smaller crop more than offset record imports. Both long and combined medium/short supplies were smaller than a year earlier. On the use side, a 17-percent drop in exports from the year- earlier record and fractional growth in domestic and residual use were responsible for a 9-percent drop in total U.S. rice use to 217.8 million cwt in 2003/04. Ending stocks declined 12 percent to 23.7 million cwt, the smallest since 1998/99. The combination of tighter supplies and a smaller carryover were largely responsible for a 67-percent boost in the U.S. season-average farm price to $7.49 per cwt, the highest since 1998/99. Global trading prices strengthened in 2003/04 as well--a result of tighter world supplies--also supporting U.S. prices. Weaker Plantings Pulled U.S. 2003 Rice Crop Down 6 Percent to 199 Million Cwt The 2003/04 U.S. rice crop is estimated at 199.2 million cwt, down 11.8 million cwt from a year earlier and the second consecutive year of declining U.S. production. The smaller crop was the result of a 7-percent decrease in plantings to 3.02 million acres. The 2003/04 area contraction was primarily due to weak prices and low price expectations at planting for both long and medium grain rice--a result of generally weak global trading prices and record total U.S. supplies in 2002/03. The average yield--6,645 pounds per acre--was up 67 pounds from a year earlier and was the highest to date. This was the fourth consecutive year of a record yield. Generally favorable growing conditions in most of the South and continued adoption of new, higher-yielding southern long grain varieties were behind the record U.S. field yield in 2003. Both long and medium grain acreage contracted in 2003. Long grain plantings declined 8 percent to 2.33 million acres. Virtually all long grain rice is grown in the South and plantings declined in every reporting State in the region. Plantings of medium grain rice dropped 4 percent to 647,000 acres. California--where more than 70 percent of the U.S. medium grain acreage is located-- accounted for all of the medium grain area contraction. Medium grain plantings actually rose slightly in the South. In contrast, plantings of short grain rice--which accounts for just 1-2 percent of U.S. rice production--were estimated at 43,000 acres, up 16,000 acres from 2002/03. California produces almost all of the U.S. short grain crop. Production declined for both long and medium grain rice in 2003. Long grain production is estimated to have been 149 million cwt, a drop of 5 percent from a year earlier and the smallest since 2000. An 8-percent decrease in long grain area more than offset a record yield. Medium grain production declined 9 percent from a year earlier to 47.4 million cwt, a result of both smaller plantings and a weaker yield. California accounted for all of the decline in medium grain production in 2003. In contrast, the U.S. short grain crop is estimated to have increased 78 percent to 2.71 million cwt, a result of both a higher yield and expanded plantings. Much of the U.S. short grain crop is exported to Japan. Rice acreage declined in 2003 in all reporting States, with Louisiana accounting for the largest share of the 218,000-acre reduction in total planted area. At 455,000 acres, Louisiana’s rice acreage was nearly 16 percent below a year earlier and the smallest since 1987. In Arkansas, the largest rice producing State, 2003 rice plantings of 1.47 million acres were down 3 percent from a year earlier. Mississippi’s rice plantings of 235,000 acres were 8 percent below 2002. In Texas, rice plantings declined 25,000 acres to 181,000, the smallest since the 1930s. Missouri’s rice area declined 7 percent from a year earlier to 176,000 acres. In California, rice plantings declined almost 5 percent to 509,000 acres. Low prices at planting and some weather problems in parts of Arkansas and Missouri were behind the smaller rice acreage in 2003 in the South. In California, severe weather problems at planting and some selling of water rights accounted for the smaller rice acreage in 2003. California experienced an extremely cold, wet spring in 2003 that delayed plantings and reduced rice acreage. Yields were higher in 2003 than a year earlier in all States except California and Texas where yields declined. Arkansas, Louisiana, Mississippi, and Missouri all reported record yields in 2003. In the South, generally favorable weather conditions across most of the region during critical growing stages and the increased adoption of new, high-yielding long grain varieties were the main factors behind the strong yields in 2003. Mississippi’s 2003 yield was estimated at 6,800 pounds per acre, an increase of 400 pounds from a year earlier. At 6,590 pounds per acre, field yields in Arkansas were up 150 pounds from 2002. Missouri’s yield was estimated at 6,130 pounds per acre, up 80 pounds from a year earlier. In Louisiana, yields were estimated at 5,870 pounds per acre, an increase of 370 pounds. In contrast, field yields in Texas were 6,600 pounds per acre, a drop of 500 pounds from 2002. Texas experienced some hurricane damage late in the season. Finally, California’s yields were estimated at 7,620 pounds per acre, a drop of 520 pounds from a year earlier and the lowest since 1999. In addition to the cold, wet spring, California had an extremely hot summer that further reduced yields. Rice production declined in 2003 in all reported States, with California accounting for the bulk of the 11.8-million-cwt reduction. At 38.6 million cwt, rice production in California was down nearly 4.4 million cwt from a year earlier. In Louisiana, production was estimated at 26.4 million cwt, a decline of 3 million cwt from 2002/03. The Texas crop--estimated at 11.9 million cwt--was down 2.7 million cwt from a year earlier and was the smallest since 1961. The Arkansas crop was estimated at 95.9 million cwt, down nearly 900,000 cwt from 2002. Missouri’s crop was estimated at 10.5 million cwt, a drop of 527,000 cwt. Finally, 2003 rice production in Mississippi was estimated at 15.9 million cwt, 280,000 cwt below a year earlier. Total Supplies Dropped 9 Percent in 2003/04 On Smaller Carryin and a Weaker Crop Total U.S. rice supplies for 2003/04 are estimated at 241.5 million cwt, down 9 percent from a year earlier. A big decline in beginning stocks and weaker production more than offset record imports in 2003/04. Beginning stocks are estimated at 26.8 million cwt, a 31-percent drop from a year earlier. Arkansas accounted for more than half the 12.2-million-cwt decline in beginning stocks. Beginning stocks were smaller in 2003/04 for both long and combined medium/short grain rice. The 2003/04 crop of 199.2 million cwt was down 6 percent from a year earlier. Both long and combined medium/short grain production were smaller in 2003. The United States imported a record 15.6 million cwt of rice in 2003/04, an increase of 5 percent from a year earlier. Medium/short grain accounted for all of the increase in U.S. rice imports in 2003/04. Puerto Rico--the largest U.S. territory--was responsible for the bulk of U.S. medium/short grain imports. In 2003/04 China supplied 114,000 tons of medium/short grain rice to Puerto Rico. In 2002/03, China and Australia together shipped more than 77,000 tons of medium/short grain rice to Puerto Rico, about evenly split between the two exporters. Prior to 2001/02, the U.S. supplied nearly all of the rice to this market. Long grain imports dropped slightly in 2003/04. Nearly all long grain rice imports are fragrant rices from Thailand, India, and Pakistan. By class, total long grain supplies dropped 10 percent to 174.5 million cwt in 2003/04. Beginning stocks, production, and imports were all down from a year earlier. At 15.7 million cwt, long grain beginning stocks were almost 42 percent below a year earlier. The 2003 long grain crop of 149 million cwt was down 8.2 million cwt from 2002. Long grain imports declined more than 2 percent in 2003/04 from the earlier record to 9.8 million cwt. Thailand--which supplies about 80 percent of U.S. long grain imports--accounted for nearly all of the annual decline. For combined medium/short grain rice, total supplies declined 4 percent in 2003/04 to 66 million cwt, the smallest since 1999/2000. A smaller carryin and weaker crop more than offset record imports. At 9.3 million cwt, beginning stocks of medium/short grain rice were 13 percent below a year earlier. Combined medium/short grain production of 50.1 million cwt in 2003 was down almost 7 percent from a year earlier. California accounted for nearly all of the decline in medium/short grain production. Imports of medium/short grain rice were a record 5.8 million cwt in 2003/04, up 21 percent from a year earlier. Shipments from China to Puerto Rico accounted for nearly all of the increase in medium/short grain imports. U.S. Exports Decline 17 Percent To 103.7 Million Cwt in 2003/04 Total use for 2003/04 is estimated at 217.8 million cwt, down 8 percent from the year-earlier record. A fractional increase in total domestic and residual use was more than offset by a big decline in exports. At 114.1 million cwt, total domestic and residual use was up less than 1 percent from a year earlier but well below the 2001/02 record of 123.3 million cwt. Food, industrial, and residual use was estimated at 110 million cwt, fractionally above a year earlier but below the 2001/02 record. The residual term includes unreported losses in transporting, processing, handling, and marketing as well as any statistical errors in other sections of the rice balance sheet, such as in production, stocks, and trade estimates. The residual is impossible to measure and can vary substantially from year-to- year. Seed use for planting the 2004 crop was calculated at 4.15 million cwt, an increase of 11 percent from a year earlier. Total U.S. rice exports in 2003/04 are estimated at 103.7 million cwt, down 17 percent from the earlier record but were the second highest to date. Both rough and milled rice exports were smaller than a year earlier. By class, exports were lower in 2003/04 for both long and medium/short grain, with long grain accounting for 89 percent of the 21-million-cwt decline in total exports. Higher U.S. prices, a much wider price difference over Thailand, and smaller U.S. supplies were behind the weaker total U.S. exports in 2003/04. U.S. rough rice exports in 2003/04 are estimated at 34.4 million cwt, down almost 20 percent from the earlier record. Weaker shipments to Brazil--a seasonal buyer of U.S. rice--as well as smaller shipments to the regular core markets of Mexico and Central America accounted for most of the decline in U.S. rough rice exports. In addition, Turkey--the only significant market for U.S. medium/short grain rough rice--reduced U.S. imports sharply in 2003/04, a result of an import ban instituted early in the 2003/04 market year. A record crop accounted for the 112,000-ton reduction in Brazil’s 2003/04 rough rice imports from the United States to 211,000 tons. Higher U.S. prices were behind a 53,200-ton cut in Mexico’s rough imports to 674,000 tons and a 37,000-ton reduction in Central America’s rough rice imports to 511,300 tons. Turkey reduced imports of U.S. rough rice 138,600 tons to 42,708 tons. In contrast, Cuba boosted imports of U.S. rough rice--all long grain--19,000 tons to 56,000 tons. Combined milled and brown rice exports (on a rough-equivalent basis) declined 15 percent to 69.3 million cwt in 2003/04. The United States faced stiff competition in several price-sensitive markets--primarily the Middle East, Sub-Saharan Africa, and Western Europe--from Asian suppliers. In 2003/04, the price difference between U.S. southern long grain milled rice and Thailand’s 100 percent Grade B averaged $154 per ton (simple average of weekly price differences), up from just $39 a year earlier. In 2003/04, U.S. milled and brown rice exports (product-weight basis) to the EU dropped 150,531 tons to 252,000 tons. The Netherlands and the United Kingdom accounted for most of the decline. Both India and Pakistan increased shipments--mostly basmati brown rice--to the EU in 2003/04. Both exporters have tariff preferences over the United States in the EU. Iraq did not purchase or receive any U.S. rice in 2003/04, down from almost 47,000 tons in 2002/03, all shipped as food aid. Saudi Arabia cut U.S. imports about 12,000 tons to 89,000 tons in 2003/04. India and Thailand have increased market shares in this high-quality long grain market. Finally, U.S. milled and brown rice exports to Sub-Saharan Africa dropped 113,500 tons to 225,400 tons in 2003/04. South Africa, Ghana, and Cote d’Ivoire account for most of the decline. Much higher U.S. prices were responsible for most of the decline in U.S. sales to this region. In addition, higher prices reduce the quantity purchased under any given food aid dollar allocations. In South Africa, the only substantial high-quality rice market in Sub-Saharan Africa, the United States lost substantial market share over the past decade to Thailand and India. Lower prices and institutional factors are the primary reasons for the loss in U.S. market share. By class, 2003/04 long grain exports dropped 19 percent to 80.7 million cwt, with the weaker rough rice sales to Latin America accounting for much of the decline. Combined medium/short grain exports declined 9 percent to 23 million cwt, with Turkey accounting for most of the reduction. U.S. 2003/04 Ending Stocks Dropped 12 Percent to 23.7 Million Cwt Ending stocks of all rice for 2003/04 are calculated from data reported in the August 2004 NASS Rice Stocks to be 23.7 million cwt, a drop of 12 percent from a year earlier. Long grain accounted for all of the decline. Arkansas reported the biggest decline in ending stocks. The total rice stocks-to-use ratio was 10.9 percent, fractionally below a year earlier and the lowest since 1980/81. By class, long grain ending stocks declined 34 percent to 10.3 million cwt, the smallest since 1995/96. The stocks-to-use ratio was 6.3 percent, down from 8.8 percent a year earlier and the lowest in more than 30 years. In contrast, medium/short grain rice ending stocks increased 33 percent to 12.4 million cwt. A 10-percent reduction in medium/short grain use more than offset a 4-percent reduction in supplies. The stocks-to-use ratio increased to 23 percent from 15.6 percent in 2002/03. The 2003/04 U.S. season-average price was reported at $7.49 per cwt, up from $4.49 a year earlier and the highest since 1998/99. The big drop in U.S. supplies was the primary factor driving U.S. prices higher in 2003/04. Global trading prices were slightly higher in 2003/04 as well, a result of tighter global supplies. Monthly reported cash prices were above a year earlier for the entire 2003/04 market year. Prices increased every month from August 2003 to July 2004 except in February, when reported prices dropped slightly. Monthly reported prices rose from $5.47 per cwt in August 2003 to $8.79 in July 2004. International Outlook for 2004/05 Global Prices Rise on Tight Supplies, Higher Thai Intervention Prices Global trading prices have increased 7 percent since the start of the 2004/05 market year in August and are the highest since March. Tight global supplies and higher prices this year for Thailand’s intervention purchases of rough rice are the main factors driving prices higher. Despite a 2-percent increase in world rice production, total supplies are projected to decline 3 percent in 2004/05, the third consecutive year of smaller global rice supplies. China accounts for the bulk of the projected increase in 2004/05 global rice production. Global ending stocks for 2004/05 are projected at 71.4 million tons, 17 percent below a year earlier and smallest since 1983/84. Exportable supplies were already tight in both China and India going into the 2004/05 market year. In addition, strong exports in 2004 are expected to tighten supplies in Vietnam and Thailand in 2004/05. The U.S. price difference over comparable grades of Thailand’s rice had narrowed to less than $70 per ton in mid-November, down from $140 in July, as U.S. prices have declined and Thailand’s prices have risen. Global Rice Production Projected To Increase More Than 2 Percent in 2004/05 World rice production is projected at 398.3 million tons (milled basis) in 2004/05, up more than 2 percent from a year earlier, but still almost 3 percent below the 1999/2000 record of 408.7 million tons. China accounts for the largest share of the 2004/05 global production expansion. Global area harvested is projected at 149.7 million hectares, virtually unchanged from a year earlier, but 5.5 million hectares below the 1999/2000 record. Larger plantings in China are nearly offset by smaller plantings in South Asia and South America. At 3.96 tons per hectare, the average global rough rice yield is projected to be 2 percent above a year earlier and the highest on record. Despite this year’s record average field yield, yield growth since 1999/2000 has been almost negligible. After increasing substantially from the late 1960s--when the International Rice Research Institute first introduced the modern, short-statue, high-yield varieties in Asia--through the 1980s, yield growth has declined. In fact, average global field yields have been nearly flat since 1999/2000. Lack of modern, high-yielding varieties developed for unfavorable ecosystems--primarily for dryland (or upland) rice and deepwater rice production--plus an apparent yield plateau for modern varieties developed for irrigated ecosystems are major factors limiting further yield growth. Environmental concerns and conversion of marginal lands into rice fields have also contributed to the much slower yield growth over the past decade and a half. China, the world’s largest rice producing country, accounts for the bulk of the 2004/05 global production increase, with China’s rice production projected at 126 million tons (milled basis), up 12 percent from a year earlier and the first increase since the record 1997/98 crop. China expanded rice area 8 percent to 28.7 million hectares in 2004/05, the largest since 2000/01. The yield is projected to be higher in 2004/05 as well. Despite the larger crop, rice supplies in China in 2004/05 are expected to decline for a fifth consecutive year, as consumption is projected to exceed production by about 10 million tons. In early 2004, China reversed its grains policy that had been designed in 1999 to lower grain production and reduce stocks from excessive levels accumulated after the mid-1990s. The new policy provided subsidies to producers to expand rice plantings and increase production. Consumer prices for rice rose substantially in China during the first half of 2003/04, a result of very tight grain supplies. China responded to the high rice prices by changing its grain policy, increasing rice imports in early 2004, reducing the pace of rice exports, and releasing government rice stocks in some provinces. China both exports and imports rice. Prior to 2004, China’s imports were nearly all premium fragrant rice from Thailand purchased primarily for high-income urban consumers. In 2004, in response to tight supplies and higher prices, China imported substantial amounts of non-fragrant long grain rice from Southeast Asia. Rice Production in 2004/05 Projected To Decline in India, Thailand, and Vietnam Among the major rice exporters, production is projected to be higher in 2004/05 in China, the United States, and Pakistan. Both Pakistan and the United States are projected to harvest record crops in 2004/05. Both countries typically export almost half their annual rice production. China’s production is the largest since 2000/01. China is essentially self-sufficient in rice, with imports an extremely small share of total supply and exports accounting for a very small share of total use. In contrast, rice production is projected to decline in Thailand, Vietnam, and India--all major exporters--in 2004/05. For India, the world’s second largest rice producing country, a second unfavorable monsoon in 3 years is projected to cut production 5 percent to 83 million tons, a major factor behind the tighter exportable supplies in 2004/05. For both Thailand and Vietnam, the world’s largest rice exporters, production is projected to decline 2 percent in 2004/05. Both countries experienced abnormal dryness this fall. The USDA is closely monitoring the weather situation in this region, due in part to a developing El Nino and will re-evaluate production forecasts throughout the year. Among the top Asian rice importers--Indonesia, the Philippines, Malaysia, and Bangladesh--only the Philippines is projected to increase production in 2004/05, with a record crop forecast. Indonesia’s production is projected to be fractionally below the year-earlier record. Severe flooding this summer has cut Bangladesh’s 2004/05 production more than 2 percent from the year-earlier record. Malaysia’s crop is projected to decline 3 percent from the 2003/04 record. Despite the smaller production forecasts for three-of-the-four top Asian importers, none of the four countries is projected to face tight supplies in 2004/05. In Northeast Asia, rice crops in both Japan and South Korea recovered from 2003 when a cold and rainy growing season cut production significantly in both countries. Taiwan’s crop is projected to decline slightly in 2004/05. All three countries import rice as part of their WTO commitments. For major non-Asian importers, record crops are projected in 2004/05 for Nigeria and Iran, and production is projected to be higher in the EU as well. Although Brazil’s 2004/05 production is projected to drop 9 percent from the year-earlier record, supplies are projected to be the highest on record. In Sub- Saharan Africa (excluding Nigeria, the largest rice producer in the region), rice production in 2004/05 is projected to drop nearly 4 percent from the earlier record. Sub-Saharan Africa (including Nigeria) is one of the largest rice importing regions in the world. World rice consumption is projected at 412.4 million tons in 2004/05, fractionally below the year-earlier record. India accounts for most of the decrease. In addition, rice consumption is projected to slightly decline in 2004/05 in Japan, South Korea, and Taiwan--a long term trend in all three countries, a result of income-driven diet diversification. In contrast, record levels of consumption--including the residual, or unreported losses in processing and handling--are projected for China, the Philippines, Bangladesh, Thailand, Vietnam, and Brazil. Both Latin America (including Brazil) and Sub-Saharan Africa are projected to consume record amounts of rice in 2004/05 as well. With consumption exceeding production in 2004/05 by 14 million tons, global rice ending stocks are projected to drop nearly 17 percent to 71.4 million tons. This is the fourth consecutive year of declining global ending stocks and the lowest ending stocks since 1983/84. The global stocks-to-use ratio is projected at 17.3 percent, down from 20.7 percent a year earlier and the smallest since 1976/77. China accounts for the biggest share of this year’s expected reduction in global ending stocks, with ending stocks projected to drop about 22 percent from a year earlier. China’s ending stocks have declined each year since 1999/2000 and are projected to be the lowest in more than 20 years. Other countries are expected to draw rice stocks down in 2004/05 as well. India’s stocks are projected to decline 17 percent to 9 million tons--a result of a weak crop--the smallest since 1987/88. Both Vietnam and Thailand are projected to reduce stocks 25-30 percent due to smaller crops. In contrast, ending stocks are projected to increase in 2004/05 in the United States, Egypt, Indonesia, and Pakistan. World trade is projected at 24.4 million tons in calendar year 2005, nearly 4 percent below a year earlier and more than 12 percent smaller than the 2002 record of 27.8 million tons. This is the second consecutive year of declining global rice trade. A decline in imports by several major buyers is the primary factor pulling global rice trade down in 2005. In 2005, weaker imports by Bangladesh, China, Malaysia, the Philippines, Saudi Arabia, South Africa, North Korea, and the United States are projected to more than offset increased imports by Cuba, Indonesia, Nigeria, Turkey, and the EU. On the export side, a big decline in shipments from Thailand, plus weaker shipments from India and Vietnam are projected to more than offset stronger exports by Argentina, Burma, Uruguay, and the United States. In 2004, global rice trade is projected to decline nearly 8 percent to 25.4 million cwt. A 1.8-million-ton drop in China’s exports and a 1.6-million-ton drop in India’ exports--plus weaker shipments from Burma and the United States--are expected to more than offset record shipments from Thailand and larger exports from Vietnam, Argentina, Australia, Uruguay, and Egypt. Among major importers, a big decline in imports in 2004 by Bangladesh, Brazil, Indonesia, Nigeria, the Philippines, and Turkey are projected to more than offset increased purchases by China, markets in the Caribbean, Iraq, Malaysia, and Saudi Arabia. International Trading Prices Are Up 7 Percent From August Global trading prices have increased 7 percent since early August, and are the highest since late March 2004 after China purchased substantial amounts of non-fragrant rice from Southeast Asian exporters. In mid-November 2004, Thailand’s 100 percent Grade B (FOB vessel, Bangkok) was quoted at $262 per ton, up $12- $15 from a month earlier and $26 higher than prices quoted in June. The price increases this fall were primarily due to higher prices for Thailand’s intervention purchases of rough rice from its growers and tight global exportable supplies. Thailand is the world’s largest exporter and accounts for more than a third of global rice exports. Thailand began its purchases of its 2004 main-crop rough rice on November 1. The purchase price is up 24 percent from a year earlier for regular rice and 29 percent higher for Thailand’s premium jasmine rice. Purchases will continue through February when the main (or wet season) harvest is over. Thailand’s milled rice prices started rising in September in anticipation of the rough rice intervention purchases. Thailand’s milled rice prices remained between $188 and $212 per ton from January 2002 through December 2003, a very tight range based on historical comparison, a result of abundant global supplies and no major weather problem in a big importing country. Thailand’s prices were actually about 10 percent lower during most of 2001, a result of heavily subsidized exported rice from India which pressured world prices lower. Thailand’s export prices from late 2000 through 2003 were the lowest since the early 1970s. Not until China began making big purchases of non-fragrant rice in early 2004 did global prices begin to substantially rise. Price quotes for Thailand’s 100 percent Grade B rose from $200 per ton in December 2003 to $260 by late March 2004. Prices declined during the spring as China delayed delivery of the purchased rice and renegotiated some contracts to stipulate a lower price. Prices showed no strength during the summer. However, by mid-October 2004 trading prices began to rise on tighter global exportable supplies and in anticipation of government purchases of rough rice by Thailand. Quotes for Vietnam’s rice have recently increased as well, a result of very tight supplies until the main winter-spring harvest in March and a full commitment to buyers of its 2004 export quota. Prices for Vietnam’s 5 percent brokens milled rice (FOB vessel, Ho Chi Minh City) were quoted at $229 per ton in mid-November, up $14 per ton from a month earlier but unchanged from August. Prices dropped in September and early October on a lack of new export sales. Vietnam banned new export sales in July and did not remove the ban until late September when it increased its 2004 export quota 300,000 tons to 3.8 million. The new sales activity, plus tight supplies, pushed prices higher. Prices for similar type and quality of U.S. long grain milled rice--No. 2, 4-percent brokens, (FAS vessel, U.S. Gulf port)-- have declined $105 per ton since mid-June, primarily due to a record 2004 U.S. rice harvest. In mid-November, the U.S. price was quoted at $314 per ton, down from $325 a month earlier and $22 below quotes in early August. After increasing the U.S. ‘free-along-side vessel (FAS)’ price to reflect a ‘free-on-board vessel (FOB)’ price, the U.S. price difference over comparable grades of Thailand’s rice declined to $67 per ton by mid-November from more than $90 a month earlier and $107 in early August. The difference was almost $200 per ton last spring. Price quotes for U.S. California milled rice have dropped sharply since early June in response to a record California harvest in 2004 and a larger carryin. In mid-November, prices for No. 1, 4 percent brokens 2004-crop California medium grain milled rice were quoted at $474 per ton (FOB mill, California), down $66 from early June. Prices for remaining 2003-crop California rice were substantially lower than new-crop quotes this fall. Very little of the 2004 California crop has yet been marketed. More information on California prices in 2004/05 will be available when Japan makes the bulk of its 2004/05 WTO purchases later this fall. Thailand, Vietnam, and India Are Projected To Export Less Rice in 2005 Global rice trade in 2005 is projected to decline 4 percent from a year earlier, the second consecutive year of declining global rice trade. Trade in 2005 is projected to be 9 percent below the 2002 record of 27.8 million tons. Weaker import demand from Asia is the major factor pulling global rice trade lower in 2005. Among the top six rice exporters--Thailand, Vietnam, India, China, the United States, and Pakistan--only the United States and Pakistan are projected to increase shipments in 2005. Thailand’s exports are projected to drop sharply from the 2004 record. India and Vietnam are projected to export less rice in 2005 as well. Among the medium-sized exporters, Argentina, Australia, Burma, and Uruguay are projected to expand exports in 2005. In 2004, big declines in exports from India, China, and the United States more than offset record exports from Thailand and larger shipments from Vietnam. Major Exporters Thailand: Thailand is the world's largest rice exporting country, and has accounted for nearly 30 percent of global rice exports over the past decade. In 2005, Thailand is projected to ship 8.25 million tons (milled basis) of rice, down 1.55 million tons from the 2004 record. A 2-percent decline in production and weaker demand from major buyers are the main factors behind the weaker trade forecast for Thailand in 2005. At 9.8 million tons, Thailand’s shipments in 2004 are up nearly 30 percent from a year earlier and are the largest amount of rice ever shipped from one country. Thailand accounts for 39 percent of global rice exports in 2004. Thailand's 2004/05 rice production is projected at 17.6 million tons (milled basis), down 2 percent from the year-earlier record, a result of a weaker yield. Thailand experienced abnormal dryness this fall. Area was fractionally higher than a year earlier and the largest on record. Thailand’s 2003/04 production of 18 million tons (milled basis) was up more than 4 percent from a year earlier, the result of near-record plantings. The yield was fractionally below a year earlier. Thailand has expanded rice area 8 percent since 2000/01. In contrast to the area expansion, Thailand’s yield growth has been flat-to-declining over the past 4 years. Thailand’s yields are low compared with most other major rice producing countries in Asia. Lack of irrigation facilities--required for growing most modern high-yielding varieties--is the major factor behind Thailand’s low yield performance. More than three-fourths of Thailand’s rice crop is grown under rainfed conditions, mostly using traditional, low-yielding varieties. The remaining production is grown under irrigated conditions during the dry season using modern high-yielding varieties. Thailand produces high-quality rice, mostly traditional varieties, that typically command a premium in global markets to rice from other Asian sources. Thailand competes with the United States in certain high-quality long grain milled rice markets-- primarily the European Union, the Middle East, and South Africa-- and with Vietnam in various intermediate-quality long grain markets, mostly in Southeast Asia and parts of Sub-Saharan Africa (mostly West Africa). Thailand also competes with India and the United States in major parboiled markets in Africa and the Middle East, and ships some low-quality rice to Sub-Saharan Africa. Thailand exports mostly long grain rice--including parboiled rice and 100 percent brokens--and smaller quantities of its premium jasmine rice, an aromatic or fragrant rice. Thailand currently exports almost 1.5 million tons of its premium jasmine rice each year, with the United States, Hong Kong, Singapore, and China major buyers. About 20 percent of Thailand’s total rice production is jasmine rice. Thailand also exports small quantities of glutinous rice, mostly to Asian markets. Glutinous rice accounts for just 2-3 percent of global rice trade and accounts for a little more than 20 percent of Thailand’s total rice production. Average field yields are typically lower for both jasmine rice and glutinous rice than for non-specialty rice in Thailand. Vietnam: Vietnam is typically the world's second largest rice exporter and is projected to export 3.75 million tons in 2005, down from 4 million in 2004 and well below the 1999 record of nearly 4.6 million tons. The weaker export forecast for 2005 is primarily due to tighter supplies. Vietnam is projected to produce 21.5 million tons of rice in 2004/05, about 2 percent below the year-earlier record, a result of a weaker yield. Parts of Vietnam experienced abnormal dryness this fall. 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 less than 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 almost half of total production and is harvested in February- March. ----1/ The harvest dates are for production occurring in the southern area of Vietnam. Harvest dates differ in the northern part of the country. Most rice production occurs 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 more than 25 percent of annual production and is harvested July through September. In recent years, the government has encouraged producers to shift land to other crops and agricultural enterprises and away from rice. This has been especially true for the summer-autumn crop which is often subject to typhoon damage. Much of Vietnam’s rice is grown under irrigated conditions, a major factor behind its stronger yield performance than Thailand. China: China's 2005 rice exports are projected at 800,000 tons, unchanged from 2004 but the lowest since 1996. China’s exports dropped sharply in 2004, a result of much tighter supplies and higher domestic prices. China’s total supplies have declined each year since 2000/01, and are projected to drop 5 percent in 2004/05 despite the larger production. China is projected to be a small net importer of rice in 2004, the first time since 1996. Except for 1989 and 1994-96, China had been a net exporter of rice very year since 1960. In 2005, China is projected to be a small net exporter again, a result of weaker imports. China exports both high-quality japonica rice--mostly to Japan and South Korea--and low-quality indica, mostly to Sub-Saharan Africa and some low-income Asian markets. China’s exports of high-quality japonica rice, grown mostly in northern China, have not declined, despite greater domestic use. The low quality indica rice, grown mostly in southern China, accounts for nearly all of the reduction in China’s exports in 2004. From 1999 through 2003, China’s grain policy was aimed at reducing production of low-quality indica rice, much of which was used as feed or stored for long periods. China harvests both an early and late indica crop on the same land in the South, with the early crop often having quality problems. China also harvests a single japonica crop each year, mostly in the North. Japonica rice is becoming more popular among China’s consumers, and production is increasing and moving south. The japonica rice typically sells at higher prices than indica in both China and in most global markets. Virtually all of China’s rice is grown under irrigated conditions, using modern high- yielding varieties. At least half of China’s rice area is planted with high-yielding hybrid rice varieties. United States: The United States is projected to export 3.35 million tons of rice in 2005, up 12 percent from a year earlier. Despite the increase, exports remain below the 2003 record of 3.83 million tons. Record U.S. supplies and a much smaller price difference over major Asian competitors for similar grades of rice are behind the stronger U.S. export forecast for 2005. The U.S. share of world trade in 2005 is projected at 13.7 percent, up from 11.8 percent a year earlier. In 2004, U.S. exports dropped 14 percent to 3 million tons, a result of higher U.S. prices, an extremely large price difference over Asian competitors, and smaller U.S. supplies. 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 1983, the U.S. share had shrunk to 20 percent and was less than 15 percent by 1995. The U.S. share continued to decline through 2001, falling to just 10.4 percent that year. Greater supplies from Asian exporters account for the bulk of the decline in the U.S. market share over the past three decades. Since 2002, the U.S. share of global rice exports has increased a little, mostly due to weaker shipments from China and India. In the late-1980s, Vietnam re-entered the global rice export market after an absence of almost 30 years. Since 1996, Vietnam has been the second largest rice exporting country most years. In the mid-1990s, India switched from exporting a few hundred thousand tons of rice a year to regularly exporting more than a million tons. India successfully competes with the United States in the higher-quality parboiled markets in the Middle East and Sub-Saharan Africa. In addition, in the 1990s the top South American exporters--Argentina and Uruguay--both significantly expanded exports, mostly within the MERCOSUR trading block and in other parts of South America. Southern long grain typically 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 Taiwan. U.S. exports to Northeast Asia are part of each importers’ WTO commitments. The United States also shipped medium/short grain rice to Uzbekistan as food aid in 2001 and 2002. In 2004, the United States has sold medium/short grain rice to several countries in Oceania--primarily Papua New Guinea, Micronesia, and Samoa, a result of very tight supplies in Australia, the major supplier to these small markets. California supplies most of U.S. medium/short grain exports. India: For 2005, India is projected to export 2.5 million tons of rice, down 11 percent from 2004 and 4.15 million tons below the 2002 record of 6.65 million. The projected export contraction in 2005 is based on tight supplies--a result of a weak harvest in 2004/05 and a small carryin going into the 2004/05 market year-- and a continuation of 2004’s policy on export subsidies. India’s exports have declined each year since 2003, primarily due to tight supplies. Total supplies have declined each year since 2002/03, and are projected to decrease more than 4 percent in 2004/05. India ’s ending stocks declined sharply in 2002/03 and have dropped even further since then. In 2002/03, an unfavorable monsoon--the first since 1987/88--cut India’s production to 72.7 million tons, down nearly 22 percent from the year-earlier record and the lowest since 1988/89. In 2004/05 production is projected to decline 6 percent to 83 million tons, a result of smaller plantings and a weaker yield. India continues to ban subsidized rice exports, limiting shipments to specialty rices--parboiled and basmati. India’s internal rice prices are typically higher than global trading prices. High internal transportation costs are a major factor. Except for its premium specialty rices, India is typically uncompetitive in the global rice market without subsidies. India exports both a premium-priced basmati rice to higher income countries, as well as low-quality non-aromatic long grain regular milled rice to developing countries. Principal markets for India’s basmati rice are the Middle East, the EU, and the United States. Russia, South Africa, Nigeria, other Sub-Saharan Africa, and the Middle East are major export markets for India's non- basmati rice. Most of India’s non-basmati exports to South Africa, Nigeria, and the Middle East are high-quality parboiled rice which sells at a substantial premium to regular milled rice. Pakistan: Pakistan is projected to export 2.1 million tons of rice in 2005, up 17 percent from 2004 but still well below the 2001 record of 2.4 million. The stronger export forecast for 2005 is based on a near-record crop of 5 million tons in 2004/05 and tight supplies from other sources. In 2002 Pakistan’s exports dropped sharply from the year-earlier record and have remained below record since. The weaker exports were primarily due to tight supplies. Pakistan experienced three consecutive years-- 2000/01-2002/03--of severe drought that sharply reduced production and supplies. Pakistan has little potential to expand exports much beyond its 2001 record. In 2004/05 Pakistan is projected to produce 5 million tons of rice, up 2 percent from a year earlier and the second highest on record, a result of a 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. Pakistan is the only major Asian country where rice is not the stable food, allowing Pakistan to export more than 40 percent of its rice production annually. 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 East Africa--where it competes with China and Vietnam, and in South Asia. Around a third of Pakistan's rice production is basmati. Higher income countries purchase the bulk of Pakistan’s basmati exports. Pakistan’s basmati rice typically sells at a lower price than India’s basmati. For all rice, Sub-Saharan Africa, Afghanistan, Bangladesh, Indonesia, the Middle East, and the EU are leading export markets for Pakistan. Other Exporters Australia: Australia's rice exports in 2005 are projected to increase 9 percent to 300,000 tons, still less than half the 1999 record of 667,000 tons. Despite the increase, exports remain well below levels reported from 1999 to 2001, a result of big declines in production in 2001/02 and 2002/03, and only marginal production recovery since. Extremely tight water supplies--which caused rice plantings to plummet--is the main factor accounting for the much smaller Australian rice crops since 2001/02. Australia’s 2004/05 rice crop is projected at 400,000 tons, up more than 4 percent from a year earlier, a result of a higher yield. Despite this year’s increase, rice production in Australia remains well below the 2000/01 record of almost 1.3 million tons. Australia's rice farmers plant in October and harvest in April- May. The rice crop is grown almost exclusively on irrigated fields in New South Wales. Australian growers typically achieve extremely high field yields, ranking second only to Egypt. Climate, varieties grown, and farm practices are the major factors behind Australia’s extremely high yields. The bulk of Australia’s rice is exported. Australia produces and exports almost exclusively high-quality medium/short grain rice. Northeast Asia is the largest market for Australia’s rice. Papua New Guinea, other countries in Oceania, and certain countries in the Middle East are also major export markets for Australian rice. 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 2005, unchanged from a year earlier but still below the 1969 record of 772,000 tons. Virtually all of Egypt’s rice exports are high-quality medium/short grain, with the eastern Mediterranean a major market. Egypt’s rice exports have increased sharply since the late 1990s, a result of both record crops and--in a few years--export subsidies. Egypt’s 2004/05 rice production is projected at a record 4.2 million tons, up 5 percent from a year earlier, a result of larger plantings and a record yield. Egypt has harvested two back-to-back record crops since 2003/04. Egypt’s yields are the highest in the world, a result of climate, varieties grown, and management practices. Much of Egypt’s rice production receives substantial government subsidy. Argentina: Argentina and Uruguay are the two largest rice exporters in South America, growing and shipping mostly long grain rice, primarily to markets within Latin America. In 2005, Argentina’s rice exports are projected at 400,000 tons, up 100,000 tons from a year earlier but well below the 1999 record of 674,000 tons. The higher 2005 export forecast is based on larger supplies. Brazil is the largest buyer of Argentina’s rice. Argentina also exports rice to other South American countries and occasionally exports out of the Western Hemisphere if Asian supplies are tight. Argentina’s 2004/05 rice crop--to be harvested in April-May 2005- -is forecast at 637,000 tons, down fractionally from a year earlier and 41 percent below the 1998/99 record of 1.1 million tons. In 2004/05, larger plantings are expected to virtually offset a weaker yield. Argentina’s 2003/04 yield was the highest on record. At 180,000 hectares, rice area in 2004/05 is 109,000 hectares below the 1998/99 record of 289,000 hectares. Generally low global trading prices from 2000 through 2003 and weaker imports from 1999 to 2002 by Brazil account for the decline in harvested area for rice from 1999/2000 through 2001/02. Area has expanded since 2002/03, a result of stronger imports by Brazil and some strength in global trading prices. Uruguay: Like Argentina, Uruguay exports most of its rice crop, with Brazil the primary market. Rice production in Uruguay declined from 1999/2000 to 2001/002, a result of smaller plantings. Weaker global prices and smaller imports by Brazil from 1999 to 2002 caused rice plantings in Uruguay to decline. However, area did not drop as sharply as in Argentina. Rice area has increased each year since 2002/03. At 195,000 hectares, rice plantings in 2004/05 are down 6 percent from the 1998/99 record of 208,000 acres. In 2004/05, Uruguay’s rice production is projected at 847,000 tons, down almost 5 percent from a year earlier. Expanded plantings are expected to be more than offset by a weaker yield. For both Argentina and Uruguay, extremely favorable weather in 2003/04 resulted in record yields. Rice production in Uruguay remains 7 percent below the 1998/99 record of 910,000 tons. Uruguay is projected to export 800,000 tons of rice in 2005, up 100,000 tons from a year earlier and second only to the 2001 record of 806,000 tons. Uruguay is the largest rice exporter in South America. Since 2003, Uruguay’s exports have increased each year, primarily due to stronger imports by Brazil after 2002. 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). Uruguay has also shipped smaller quantities of rice to Caribbean markets and to the Middle East. Like Argentina, Uruguay produces and exports mostly high-quality long grain rice. The European Union (EU): Although a net importer of rice, the EU regularly exports rice outside the region. In 2005, the EU is projected to export 300,000 tons, up 75,000 tons from a year earlier and the largest since 2002. Italy accounts for nearly all of the EU rice exports outside the region. The EU exports medium/short grain rice, mostly to countries in the Mediterranean. The EU ships smaller amounts of rice--mostly as food aid--typically to the former Soviet Union, the Balkans, North Korea, and Sub-Saharan Africa. The United States purchases small amounts of Italian Arborio rice each year. The EU is a high-cost rice producer and relies on subsidies to ship most of its commercial exports. EU export subsidies are limited by the WTO. Internal rice prices in the EU are substantially above global trading prices. The EU domestic market is currently protected from imports by high tariffs. EU production in 2004/05 is projected at 1.74 million tons, up 3 percent from a year earlier, a result of expanded area. Despite the increase, production is still below the 1997/98 record of 1.8 million tons. At 414,000 hectares, area is up slightly from last year but still about 3 percent below the 1996/97 record of 426,000 hectares. The majority of the EU’s rice production is medium/short 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. Greece, France, and Portugal account for the remainder. Burma: In 2005 Burma is projected to export 400,000 tons of rice, an increase of 300,000 tons from 2004 but only fractionally above 2003 exports. In February 2004, Burma placed a ban on new exports of rice that remains in effect. Trade is strictly controlled by the Government of Burma. In 2003, Burma had indicated it would liberalize rice trade. It is not clear what Burma’s trade policy will be once the ban is removed. 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 1990s, exports had dropped sharply, averaging less than 100,000 tons a year from 1997 through 2000. Burma’s exports picked up in 2001 and 2002, primarily due to bumper crops, competitive prices, and government policy. In fact, Burma’s exports of 1 million tons in 2002 were the largest since 1966. However, Burma’s exports declined again in 2003 and 2004. Poor quality, lack of reliability as a supplier, inadequate infrastructure, few alternative foods for Burma’s consumers, and government policies are major factors behind Burma’s dismal long-term export performance. Burma's 2004/05 rice crop is projected at 10.15 million tons, down more than 5 percent from a year earlier and 6 percent below the 2002/03 record. Smaller plantings--a result of low internal prices--are behind the weaker 2004/05 production forecast. The export ban has caused farm prices to drop sharply in Burma. 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 mostly to low-income countries. Global Rice Imports Are Projected To Decline 4 Percent in 2005 Global rice imports are projected to decline 4 percent in 2005 to 24.4 million tons, the third consecutive year of declining global rice trade. Trade would be the smallest since 2000 and nearly 9 percent below the 2002 record of 27.8 million tons. Declining Asian imports have accounted for the bulk of the decline in global rice trade since 2004. In 2005, weaker imports by China, the Philippines, Saudi Arabia, and South Africa are projected to more than offset larger imports by Indonesia, Nigeria, and Turkey. Trade in 2004 is forecast at 25.4 million tons, down almost 8 percent from 2003. In 2004, weaker imports by Bangladesh, Brazil, Indonesia, Nigeria, the Philippines, and Turkey more than offset greater imports by China, markets in the Caribbean, Iraq, Malaysia, Saudi Arabia, South Africa, and Sri Lanka. Major Importers Asia In 2005, Asia is projected to import 6.3 million tons of rice, down 11 percent from 2004 and the second consecutive year of declining imports by the region. Bumper crops in major importing countries--especially Indonesia and the Philippines--is the major factor behind Asia’s declining rice imports. Asia’s imports are 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. After declining in 1999 and 2000, Asia’s rice import increased from 2001 to 2003. Asia is typically the world’s largest import market for rice. However, in 2005 Africa’s imports are projected to exceed Asia’s, the first time since 1992. Indonesia: Indonesia is projected to import 1 million tons of rice in 2005, up 200,000 tons from a year earlier but well below imports in 2002 and 2003. Two consecutive years of bumper crops and large domestic supplies are behind the weak import forecast for 2005. In 2004, Indonesia placed a ban on imports to protect its farmers from lower-priced imported rice. Indonesia’s 2004 imports of 800,000 tons were the lowest since 1993. Despite the recent decline in Indonesia’s imports, a rising population, inability to significantly expand area, and fractional yield growth all indicate Indonesia will increase imports in the future. Indonesia's 2004/05 crop is projected at 35 million tons, fractionally below the year-earlier record. At 11.75 million hectares, area is unchanged from 2003/04 but below the 1998/99 record of 12 million hectares. Indonesia has had difficulty maintaining record rice acreage, especially on its densely populated main island of Java. The yields in 2004/05 and 2003/04 are the highest on record. Rice is harvested almost year-round in Indonesia, although the largest crop is planted in the fall and harvested in the winter and spring. The timing and intensity of the rainy season is critical to Indonesia’s rice crop. A delayed or weakened monsoon can severely reduce Indonesia’s rice production. The Philippines: The Philippines are projected to import 800,000 tons of rice in 2005, down 300,000 tons from 2004 and 500,000 tons below 2003 imports. Imports in 2005 will be the smallest since 1996. Back-to-back record harvests in 2003/04 and 2004/05 are behind the sharp decline in imports in 2004 and 2005. The Philippines is projected to produce a record 9.2-million-ton rice crop in 2004/05, up 2 percent from a year earlier. At 4.12 million hectares, plantings in 2004/05 are projected to be unchanged from the year-earlier record. Yields were record-highs to date in both 2003/04 and 2004/05. The Government of the Philippines is making efforts to boost yields by promoting the use of high-yielding hybrid seeds. Despite a bumper crop, consumption--projected at a record 10.3 million tons--is expected to exceed milled rice production by 1.1 million tons in 2004/05. This is the 14th consecutive year that consumption has exceeded production. Lack of resources to significantly expand rice growing area and develop infrastructure, slow yield growth, and steadily increasing population indicate the Philippines will be a regular importer of rice for the foreseeable future. Bangladesh: In 2005, Bangladesh is projected to import 550,000 tons of rice, unchanged from a year earlier but less than half the amount imported in 2003. Imports are well below the 1998 record of 2.5 million tons. Record supplies and bumper crops are behind the weaker import forecasts for 2004 and 2005. Despite severe flooding in the summer and fall of 2004, rice production in 2004/05 is projected at 25.5 million tons, second only to the 2003/04 record harvest of 26 million tons. In 2003/04, both area and yield were the highest on record. Area is projected to decline slightly in 2004/05, a result of the flooding. Despite the record area reported in 2003/04, rice plantings in Bangladesh are up only 5 percent from 15 years ago. And while average yields are up 40 percent from 1990/91, much of the yield growth has been due to a shift in area from the low-yielding, mostly dryland, Aus crop to the high-yielding, irrigated Boro crop. Average yields from the Boro crop have not increased since 2000/01. Despite its success in increasing rice production nearly 29 percent since 1998/99, Bangladesh is unlikely to become self- sufficient in rice and will likely remain a major importer over the next decade. Bangladesh has a preference for parboiled rice. However, because price is a critical factor, Bangladesh will often import low-quality regular milled long grain rice if cheap parboiled is not available. Malaysia: Malaysia is projected to import 550,000 tons of rice in 2005, down 175,000 tons from the year-earlier record. Larger supplies and a build-up in stocks are behind the weaker import forecast. At 1.45 million tons, Malaysia’s 2004/05 rice production is down 3 percent from the year-earlier record, a result of a weaker yield and slight drop in plantings. At 670,000 hectares, rice plantings in Malaysia in 2004/05 are fractionally below the 675,000 hectares harvested a year earlier. Malaysia is unlikely to significantly expand rice area unless global prices are substantially higher. In fact, rice area has hardly expanded over the past 15 years and remains well below the 1972 and 1975 record of 750,000 hectares. In fact, plantings in 2003/04 were up just 1 percent from 1990/91. Yield growth has been quite slow since 1990/91 as well. Despite declining per capita rice consumption--a result of rising incomes--Malaysia is expected to remain a major rice importer over the next decade. China: In 2005, China is forecast to import 600,000 tons of rice, down from 1.1 million tons in 2004. China’s rice imports in 2004 were four times the level imported in 2003 and the largest since 1995. The big increase in imports was a result of tight domestic grain supplies and rising consumer prices. In 2004, around 300,000 tons of the imported rice was jasmine (fragrant) rice from Thailand. The rest was non-fragrant long grain rice from Thailand and Vietnam. This was the first year since 1996 that China imported any significant amount of non-fragrant rice. For 2005, China’s imports are projected to be about evenly split between jasmine rice and non-fragrant rice. China does not grow jasmine rice which is consumed mostly by high-income urban consumers. China is a regular importer of jasmine rice. China’s total rice supplies have declined each year since 2000/01, a result of a steady decline in production from 1997/98 through 2003/04. In response to the tight supply situation, China reversed its grain policy in early 2004 from discouraging rice production to subsidizing farmers to produce more rice. In response to the higher prices and government support, rice area increased 8 percent in 2004/05 and production rose 12 percent to 126 million tons. Despite the increase, China’s rice production still remains 10 percent below the 1997/98 record of 140.5 million tons. China is the largest rice consuming country in the world. Except for 1989, 1994-96, and 2004, China has been a major net-exporter of rice since 1960. For the longer term, China is projected to be only a minor importer of non-fragrant rice and to remain essentially self-sufficient in rice. Imports of jasmine rice are projected to increase each year. Per capita rice consumption in China is expected to decline over the next decade, a result of income-induced diet diversification. 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 countries have extremely strong preferences for medium/short grain varieties. The United States, Australia, and China are the major suppliers. However, because Japan and South Korea use long grain rice in certain processed uses, a portion of the import competition is open to other 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 to halve to 0.4 percent in return for allowing over-quota imports. Japan imported 682,000 tons of rice in its 2000/01 fiscal year (April-March), and imports are expected to remain at this level 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 2005, unchanged from a year earlier. To date, there have been virtually no over-quota rice imports, a result of an extremely high over-quota tariff. In 2003/04, excessive rain and abnormally cool weather caused Japan’s rice production to drop 12 percent to 7.1 million tons, the smallest crop in more than half a century. A big drop in yield was the major factor behind the reduced production. Area was down slightly. Despite the weak harvest, Japan did not import any rice above its WTO commitment. For 2004/05, production is projected to increase more than 12 percent to 7.95 million tons, with both area and yield up from 2003/04. Rice area and yield peaked in Japan in 1967/68. The Government of Japan has conducted area diversion programs since 1971 to reduce rice production in the face of declining per capita consumption. Under UR-GATT, South Korea minimum access imports are scheduled to increase from 57,000 tons (milled basis) in 1995/96 to 205,000 tons in 2004/05. South Korea’s import commitments will remain at this level unless another agreement is reached. South Korea’s rice imports are projected at 210,000 tons in 2005, unchanged from a year earlier. South Korea is not projected to import above its WTO commitment. Like Japan, South Korea’s 2003/04 rice crop was adversely affected by an abnormally wet and cool growing season. Production in 2003/04 was estimated at 4.45 million tons, down 9 percent from a year earlier, a result of both smaller area and a weaker yield. This was the smallest rice crop since 1980/81 and the second consecutive year of declining rice production in South Korea. The 2004/05 crop is projected at 4.85 million tons, an increase of 9 percent, a result of a higher yield. Rice area in South Korea peaked in 1987/88, and production was the highest on record in 1988/89. Like Japan, South Korea faces declining per capita rice consumption resulting from diet diversification. North Korea: North Korea is projected to import 500,000 tons of rice in 2005, down from 600,000 a year earlier. Food aid accounts for all of North Korea’s rice imports. Japan had been the primary supplier of these shipments. In 2002, South Korea began giving substantial amounts of rice to North Korea and in 2004 purchased the bulk of the rice for North Korea. Most of the rice was purchased from Thailand and Vietnam. South Korea also supplied some of its own rice to North Korea in 2004. North Korea’s rice production is projected at 1.52 million tons in 2004/05, up 1 percent from a year earlier, a result of a higher yield. Harvested area remains forecasted at 595,000 hectares. Despite the increase, production remains well below the 1999/2000 crop of 1.6 million tons and 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 1.42 million tons on 575,000 hectares with an average paddy yield of about 3.8 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 and 2004, under a TRQ in both years. Details regarding the administration of Taiwan's import commitments for 2005 and beyond are still being negotiated at this time. However, because Taiwan opted for tariffication in 2003, the import volume commitment will not change. For calendar year 2005, Taiwan is projected to import 125,000 tons (milled basis), unchanged from 2004. The United States has supplied more than two-thirds of Taiwan’s rice imports since 2002. Taiwan is essentially self-sufficient in rice. Taiwan strictly controls imports to protect producers from lower-priced imported rice. Producer prices on Taiwan are typically 4-5 times higher than prices in the international market for similar grades of rice. In 2004/05 Taiwan is projected to produce 1.03 million tons of rice, down 12 percent from a year earlier, a result of both a weaker yield and smaller plantings. At 264,000 hectares, rice area is down 3 percent from a year earlier and the lowest in more than 50 years. Like Japan, Taiwan has experienced declining per capita rice consumption for decades, a result of higher incomes. For two decades, authorities on Taiwan have encouraged producers to shift land away from rice to alternative crops. The Middle East Rice imports in 2005 by the Middle East are projected at 4.37 million tons, down 3 percent from the year earlier record. Production is projected at a record 2.65 million tons in 2004/05, up 4 percent from a year earlier and the fourth consecutive year of increasing rice production in the region. Plantings of 835,000 hectares in 2004/05 are the highest on record and an increase of 11 percent from a year earlier. From 1999/2000-2001/02 the region suffered from a severe drought which adversely affected rice harvests. Area, yield, and production recovered sharply in 2002/03. The Middle East relies on imports to supply 60-65 percent of its rice consumption. The region has little ability to significantly expand production without huge costs. Consumption increases 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. Iran: In 2005 Iran is projected to import 950,000 tons of rice, unchanged from a year earlier but well below the record 1.76 million imported in 1995. Iran’s annual rice imports often show sharp year-to-year fluctuations. Iran has been a major rice importer since the late 1970s. Thailand and India currently supply most of Iran’s rice imports. Iran buys mostly high-quality long grain rice. In 2004/05, Iran’s crop is projected at a record 2.2 million tons, up 1 percent from a year earlier, a result of record plantings. The yield is projected to be well below the 2003/04 record. 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 2005, unchanged from a year earlier. Prior to the 2003 Iraq 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 rice under food aid programs in 2003, including some shipments from the United States. In 2004, the Iraqi Grain Board made commercial purchases of rice, mostly from Thailand and Vietnam. Like Iran, Iraq’s rice crop suffered from severe drought, and production declined in 1999/2000 and 2000/01. Iraq’s 2004/05 crop is projected at 100,000 tons, unchanged from a year earlier but well below the 1994/95 record of 255,000 tons. Area and yield in Iraq are substantially below levels reported in the early and mid-1990s. Saudi Arabia: In 2005, Saudi Arabia is projected to import 1.1 million tons of rice, down from the record 1.35 million tons imported in 2004. Saudi Arabia does not grow any rice. The country is a major market for high-quality parboiled rice. Thailand and India are the largest suppliers. The United States sells high-quality long grain parboiled rice to Saudi Arabia as well. Turkey: Turkey’s imports are projected at 250,000 tons in 2005, up 100,000 from a year earlier but well below the 350,000 tons imported in 2003. In September 2003 Turkey placed a ban on new purchases of foreign rice and continued to restrict and limit rice imports in 2004. Turkey is restricting imports to protect its producers from two consecutive record crops that boosted Turkey’s rice supplies and depressed prices. At 350,000 tons, Turkey’s 2004/05 rice production is up 3 percent from a year earlier and is the largest on record. At 90,000 hectares, area in 2004/05 ties the 1996/97 and 1997/98 record. The average yield, the highest on record, climbed 8 percent from a year earlier. Turkey is typically the second largest global import market for medium/short rice--after Japan--with the United States, Egypt, Australia, and the EU the major suppliers. Turkey became a significant import market for rice in the mid-1980s when production declined. Sub-Saharan Africa Imports by Sub-Saharan Africa (including the Republic of South Africa) are projected at 6.2 million tons in 2005, down 1 percent from a year earlier and well below the 2002 record of 7.4 million tons. Higher trading prices and a near-record crop account for much of the import reduction. At 7.28 million tons, rice production in Sub-Saharan Africa is just 1 percent below the year-earlier record. With the exception of the Republic of South Africa, most of Sub-Saharan Africa is a low-quality rice market. Nigeria: Nigeria is the largest rice importer in Sub-Saharan Africa and one of the largest global rice importers. Nigeria’s 2005 rice imports are projected at 1.4 million tons, up 100,000 tons from a year earlier, a result of tighter supplies and expectations of a big drop in ending stocks. Despite the increase, imports remain well below the record 1.9 million imported in 2001 and 2002. Bumper crops and a large build-up in stocks from 2001/02 to 2003/04 account for the Nigeria’s smaller rice imports after 2002. Nigeria’s production in 2004/05 is projected at a record 2.3 million tons, up 100,000 from a year earlier. The yield was up from 2003/04 as well. The Government of Nigeria is encouraging farmers to expand rice plantings and promoting the use of higher- yielding rice seeds developed for Africa. Nigeria purchases mostly parboiled rice. Thailand supplied the bulk of this rice during the 1990s. In 2001 India also began shipping parboiled rice to Nigeria, all at a very high subsidy. South Africa: The Republic of South Africa is projected to import 650,000 tons of rice in 2005, down from a record 800,000 tons in 2004 and 2002. Even with the weaker imports, supplies are projected to be the highest on record in 2004/05. India and Thailand supply most of South Africa’s rice imports, mostly high- quality parboiled. The United States, which supplies smaller amounts of rice to South Africa, has lost substantial market share since the early 1990s in this high-quality market. South Africa does not produce rice. Other Sub-Saharan Africa: Senegal is a major market for brokens and a major importer of rice in Sub-Saharan Africa. In 2005, Senegal is projected to import 750,000 tons of rice, unchanged from 2004, but down 124,000 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 650,000 tons of rice in 2005, 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 300,000 tons in 2005, unchanged from a year earlier but 50,000-68,000 tons below levels imported from 2001-2003. Ghana’s stocks rose sharply in 2000/01 and 2001/02. Guinea is projected to import 300,000 tons of rice in 2005, unchanged from a year earlier but 50,000 tons below the 2003 record. Latin America Rice imports by Latin America (Mexico, the Caribbean, Central America, and South America) are projected at nearly 3.25 million tons in 2005, up 2 percent from a year earlier. 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 decline 5 percent in 2004/05 to 14.8 million tons. South America accounts for most of the region’s projected production decline. Latin America is primarily a long grain import 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. Much of the rice imported by the Andean countries is supplied by Andean countries. 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 550,000 tons in 2005, up 25,000 tons from a year earlier but well below the record 582,000 tons imported in 2003. Higher prices and a build-up in ending stocks are behind the weaker import forecast after 2003. Mexico is unlikely to expand production and, with continued growth in consumption, will remain a major rice market in the foreseeable future. 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 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 2005 the Caribbean is projected to import a record 1.17 million tons of rice, up more than 4 percent from a year earlier and the second consecutive year of record imports. A big decline in production after 2002/03 is the primary factor driving the record imports. Production for the region in 2004/05 is projected at 530,000 tons, down fractionally from 2003/04 and 16 percent below production in 2002/03. Rice production in the Caribbean remains well below the 1984/85 record of 809,000 tons. Cuba and the Dominican Republic account for most of the recent production decline. Cuba is responsible for most of the long-term decline in rice production in the Caribbean. Cuba is projected to import a record 700,000 tons of rice in 2005, up 50,000 tons from a year earlier and nearly twice the quantity imported in 2002. Rice production in Cuba is projected at 165,000 tons in 2004/05, up from 135,000 tons in 2003/04 but well below levels harvested the previous 2 years. Cuba has experienced weather problems the last 2 years that have adversely impacted rice production. Rice production in Cuba has declined substantially since the mid-1980s. Vietnam is a major supplier of rice to Cuba. Since 2002 the United States has supplied rice to Cuba as well. In 2005, Haiti is projected to import 300,000 tons of rice, up from 250,000 tons a year earlier but still below the 2003 record of 345,000 tons. Stocks have increased substantially in Haiti since 2002/03, a factor behind the weaker imports in 2004. 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 projected to import 75,000 tons of rice in 2005, down from 125,000 tons in 2004. The Dominican Republic imported virtually no rice in 2002 and 2003. Production problems in 2003/04 and 2004/05 necessitated much larger imports. Jamaica is projected to import 50,000 tons of rice in 2005, unchanged from a year earlier. The United States is a major supplier of rice to Jamaica, with food aid accounting for a large share of U.S. shipments. Jamaica does not produce any rice. Trinidad and Tobago is projected to import 45,000 tons of rice in 2005, unchanged from a year earlier. Rice imports by Trinidad and Tobago have been relatively stable since the mid-1990s. The United States typically supplies much of this market. Brazil: Brazil is Latin America's largest rice producer and consumer, and is typically the largest importer as well. Brazil is projected to import 700,000 tons of rice in 2005, unchanged from 2004 but well below the 1998 record of nearly 1.6 million tons. Brazil's 2004/05 crop is projected at 7.9 million tons, down 9 percent from the year-earlier record of 8.7 million tons, the result of smaller plantings. The 2003/04 record crop led to a large build-up of rice stocks. Rice consumption exceeded production every year from 1988/89 to 2002/03, 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 of rice to Brazil, mostly in the form of rough rice. Colombia: Colombia is projected to import 100,000 tons of rice in 2005, up from 60,000 tons a year earlier. Despite several recent bumper crops, supplies and stocks have been declining in Colombia since 2001/02. Colombia has substantially lowered its annual imports from levels imported in the mid- and late 1990s, a result of larger production. Peru: Peru’s imports are projected at 70,000 tons in 2005, down 10,000 tons from a year earlier but more than twice the level imported in 2002 and 2003. Peru’s 2004/05 crop is projected at 1.3 million tons, up 100,000 from a year earlier. The 2003/04 crop was severely impacted by drought which cut the harvest 25 percent from the year-earlier record. Peru increased its rice production sharply from the mid-1990s through 2002/03, leading to a big decline in imports. Central America: The region is projected to import 430,000 tons of rice in 2005, down 50,000 tons from the year-earlier record. Higher prices and a build-up in stocks in the region are behind the weaker import forecast for 2005. At 564,000 tons, production is virtually unchanged from a year earlier but below the record 613,000 tons harvested in 2000/01. Area and production are not increasing in the region. Costa Rica’s imports are projected at 100,000 tons, about 25,000 tons below the year-earlier record. Rice stocks are building in Costa Rica. Guatemala’s imports are projected to decline 25,000 tons to 50,000 tons, also due to large supplies. Nicaragua’s rice 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. Panama and Nicaragua are the largest rice producers in the region, accounting for nearly 70 percent of total production. Costa Rica is the only other significant producer in Central America. Rice consumption in the region has steadily increased since the early 1990s and is outstripping production. The United States supplies nearly all of the rice imported 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 1.05 million tons of rice in 2005, up 50,000 tons from 2004 but below the 2001 record of 1.19 million tons. The EU imports mostly long grain rice--with the United States and Thailand major 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 the bran layer intact--that is then fully milled within the EU. The EU changed its rice policy on September 1, 2004. It eliminated using a ‘margin of preference’ for calculating duties on imported brown and milled rice and instead will assess fixed duties on all forms of imported rice. It is not clear yet how this new policy will affect EU import levels or U.S. competitiveness in the market. The former Soviet Union (FSU): The countries of the former Soviet Union are projected to import 526,000 tons of rice in 2005, unchanged from a year earlier but below levels imported in 2002 and 2003. Production in 2004/05 is projected at 889,000 tons, an increase of 4 percent from a year earlier but 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 2005, unchanged from a year earlier. Russia’s rice production is projected at 300,000 tons in 2004/05, unchanged from 2003/04 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 2005, with imports projected at 75,000 tons, unchanged from 2004. At 50,000 tons, rice production in Ukraine in 2004/05 is slightly below a year earlier and only about half the level produced in 1989/90. Uzbekistan is projected to import 25,000 tons of rice in 2005, unchanged from a year earlier but well below levels imported in 2001 and 2002. Rice production in Uzbekistan collapsed in 2000/01 and 2001/02, a result of the severe drought in the region. Production in 2004/05 is projected at 240,000 tons, up 60,000 tons from a year earlier and 4-5 times the amount produced annually during the 2000-2002 drought. United States: Imports by the United States are projected at 460,000 tons in 2005, down 8 percent from the year-earlier record. Smaller shipments of medium/short grain rice from China to Puerto Rico account for all of the projected decline. Imports have expanded sharply in the United States over the past 25 years.