Rice YEARBOOK -- TEXT December 23, 2005 December 2005, ERS-RCS-2005 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 21, 2005. 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 2005, RCS- 2005. Contents Summary U.S. Outlook for 2005/06 Bumper Crop, Record U.S. Supplies Projected for 2005/06. U.S. 2005/06 Total Rice Use Is Projected at a Record 247.2 Million Cwt U.S. Average Farm Price and Global Prices Are Expected Higher in 2005/06. Recap of 2004/05 U.S. Rice Market Record Crop Pushed U.S. Season-Average Farm Price Down 9 Percent. International Outlook for 2005/06 Tighter Supplies To Raise Global Trading Prices in 2005/06 India, Vietnam, & Pakistan Are Projected To Export Less Rice in 2006 Global Rice Imports Are Projected To Decline 8 Percent in 2006. 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 Agnes Prentice (202) 694-5240 Approved by the World Agricultural Outlook Board. Summary released November 21, 2005. 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 U.S. 2005/06 Rice Crop Is Projected At a Near-Record 220.7 Million Cwt The 2005/06 (August-July) U.S. rough rice crop is forecast at 220.7 million hundredweight (cwt), down more than 4 percent from a year earlier but second only to the 2004/05 record. This year’s smaller crop is the result of an almost 5-percent reduction in the average yield more than offsetting a slight increase in area. Weather problems in both California and the South—including two Gulf Coast hurricanes—account for most of the decline in the average yield. The increase in total rice acreage was the result of expanded acreage in the South more than offsetting a decline in California. Medium grain accounts for all of the decline in U.S. rice production. In contrast, both long and short grain crops are projected larger in 2005/06. In early November, the U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS) forecasted average field yields for 2005/06 at 6,603 pounds per acre, down 339 pounds from the year-earlier record. Field yields are projected lower this year for all reporting States except Louisiana and Texas, with California experiencing the largest decline. A 27- percent decline in California’s rice production—plus a slightly smaller Texas crop—are projected to more than offset record crops in Arkansas and Missouri and larger crops in Louisiana and Mississippi. Total U.S. rice supplies in 2005/06 are projected at a record 273.4 million cwt (rough basis), up 2 percent from a year earlier. A big increase in beginning stocks and larger imports are projected to more than offset a smaller crop. This is the second consecutive year of record total U.S. rice supplies. U.S. rice imports in 2005/06 are projected at 15 million cwt. The bulk of U.S. rice imports are fragrant rices from Asia not currently grown in the United States. Thailand is the largest supplier of rice to the United States, shipping mostly its premium “jasmine” rice. Total supplies of long grain rice are projected to increase 9 percent in 2005/06 to a record 207.1 million cwt. A large carryin, a bumper crop, and record imports all support projections for record long grain supplies. The medium/short grain supply outlook for 2005/06 is quite different from the long grain outlook. Medium/short grain supplies are projected to drop 15 percent to 65.1 million cwt, the smallest since 1999/2000. A big drop in production is projected to more than offset a larger carryin and increased imports. Total Rice Use in 2005/06 Is Projected To Increase Nearly 8 Percent Total rice use—domestic and residual use plus exports—in 2005/06 is projected at 247.2 million cwt, up 17.2 million cwt from a year earlier and the highest on record. Both domestic and residual use and exports are projected to be higher in 2005/06. Total domestic use—including the residual, or unreported losses in transporting, processing, and marketing plus any statistical errors— is projected to increase more than 5 percent to a record 126.2 million cwt. U.S. rice exports are projected at 121 million cwt (rough equivalent of both rough and milled rice exports), up 10 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 an expected smaller price difference over Asian competitors are behind expectations of near-record U.S. rice exports in 2005/06. U.S. rough rice exports for 2005/06 are projected at 36 million cwt, up more than 2 percent from a year earlier but still 16 percent below the 2002/03 record. Mexico and Central America—the two largest markets for U.S. rough rice—are projected to account for most of the growth in 2005/06. Combined milled and brown rice exports (on a rough basis) are projected at a record 85 million cwt in 2005/06, up nearly 10 million cwt from a year earlier. Long grain accounts for all of the projected increase in total rice use in 2005/06. Total use of long grain rice is projected at a record 188.1 million cwt, up almost 13 percent from a year earlier. Both exports and domestic use of long grain rice are projected higher in 2005/06. In contrast to the U.S. long grain market, total use of U.S. medium/short grain rice in 2005/06 is projected to decline 6 percent to 59.1 million cwt. Both domestic use and exports are projected to be smaller in 2005/06. Tight supplies and much higher prices account for the expected decline in medium/short grain use. The Middle East and Oceania are expected to account for most of the year-to-year decline in U.S. medium/short grain exports. U.S. 2005/06 Ending Stocks Are Projected To Decline 30 Percent to 26.2 Million Cwt U.S. ending stocks for 2005/06 are projected at 26.2 million cwt, down 11.5 million cwt from a year earlier. The resulting stocks-to-use ratio is projected at 10.6 percent, down from 16.4 percent a year earlier and the lowest since 1980/81. The ending stocks situation is different by class. Medium/short grain ending stocks are projected to decline 57 percent to 6 million cwt, the lowest since at least 1982/83 when USDA first started reporting supply and use tables by class. Prices for U.S. medium/short grain rice will face substantial upward price pressure throughout the 2005/06 market year. For long grain rice, ending stocks for 2005/06 are projected at 19.1 million cwt, down 16 percent from a year earlier but still well above levels estimated for 2000/01 and 2003/04. Despite the projected 3.6-million-cwt decline on long grain ending stocks, only a modest increase in long grain prices is likely in 2005/06. The main factor expected to push U.S. long grain prices up in 2005/06 is higher world prices. The 2005/06 U.S. season-average farm price (SAFP) is projected at $7.75 to $8.05 per cwt, up from $7.33 a year earlier. The higher U.S. SAFP in 2005/06 is primarily due to a 15-percent drop in U.S. medium/short supplies and higher global trading prices, especially for medium grain. Global trading prices for all rice are expected to increase for a second consecutive year due to tighter world supplies and higher prices for this year’s intervention purchases of rough rice by the Government of Thailand. Through mid-October 2005, the simple-average of U.S. monthly reported cash prices—including any remaining 2004-crop sales—was $6.78 per cwt, well below the projected SAFP for 2005/06, indicating U.S. prices will have to increase during the remainder of the market year. Despite Larger World Production, Global Rice Supplies Are Projected To Decline 2 Percent in 2005/06 World rice production is projected at 406.1 million tons (milled basis) in 2005/06, up 1 percent from a year earlier but still fractionally below the 1999/2000 record of 408.8 million tons. Despite larger production in 2005/06, global rice supplies are projected to decline 2 percent to 478.9 million tons, the smallest since 1993/94. This is the fourth consecutive year of declining global rice supplies. China, the world’s largest rice-producing country, accounts for the bulk of the 2005/06 global production increase, with China’s rice production projected to increase almost 2 percent to 127.4 million tons (milled basis). China maintained the same grain policy in 2005 it adopted a year earlier that provided direct subsidies to farmers to grow rice and eliminated some taxes on grain producers. In addition to China, crops are projected to be larger in 2005/06 in Bangladesh, Burma, Thailand, Nigeria, Australia, the Philippines, Indonesia, Pakistan, and Sri Lanka. In contrast, Brazil, South Korea, the United States, and the European Union (EU-25) are projected to harvest smaller crops in 2005/06. World rice consumption—including a residual component that represents unaccounted losses and any statistical errors—is projected at 414.2 million tons in 2005/06, about 1 million tons below a year earlier and nearly 1.4 million tons below the 2003/04 record. India accounts for most of the projected consumption decrease in 2005/06. India’s consumption forecast includes a substantial residual term. The residual term is impossible to estimate for India or any other country. In addition to India, rice consumption is projected to slightly decline in 2005/06 in Japan and South Korea—a long-term trend in both countries—a result of income-driven diet diversification. With consumption exceeding production in 2005/06 by 8.1 million tons, global rice ending stocks are projected to drop 11 percent to 64.6 million tons. This is the fifth consecutive year of declining global ending stocks and the lowest ending stocks since 1982/83. The global stocks-to-use ratio is projected at 15.6 percent, down from 17.5 percent a year earlier and the smallest since 1974/75. China accounts for the biggest share of this year’s expected reduction in global ending stocks. China’s ending stocks have declined each year since 2000/01. Ending stocks are also projected to decline 2005/06 in Brazil, Vietnam, and the United States. Global Rice Trade Is Projected To Decline 8 Percent in 2006 World trade is projected at 25.5 million tons in calendar year 2006, an 8- percent drop from a year earlier and more than 8-percent smaller than the 2002 record of 27.8 million tons. A decline in imports by several major buyers— primarily the Philippines, Sub-Saharan Africa, Bangladesh, Saudi Arabia, and Indonesia—is the major factor pulling global rice trade down in 2006. These reductions are partially offset by increased imports by Brazil, Iraq, and South Korea. On the export side, weaker shipments from India, Vietnam, Pakistan, China, and Egypt are projected to more than offset stronger shipments from Thailand, Argentina, Australia, and Uruguay. In 2005, global rice trade is projected to increase 2 percent to 27.7 million tons, fractionally below the 2002 record. Expanded shipments from India, the United States, Pakistan, Egypt, and Argentina are projected to more than offset a 2.9-million-ton drop in Thailand’s exports and weaker shipments from China and Uruguay. Among the major importers, larger imports by the Philippines, Sub-Saharan Africa, Indonesia, Cuba, Iraq, and Turkey are projected to more than offset reduced imports by China, Brazil, Saudi Arabia, Sri Lanka, and the United States. Global trading prices are currently up about 5 percent from a year earlier, primarily due to tighter global supplies in 2005/06. For the week ending November 21, Thailand’s 100 percent Grade B (FOB vessel, Bangkok) was quoted at $282 per ton, up $13 from a year earlier. Prices had exceeded $300 per ton last spring, as Thailand was holding substantial amounts of its 2004/05 main- season rough rice crop off the market. Prices began to drop by late spring due to a record winter-spring harvest in Vietnam and lack of demand for Thailand’s rice due to more competitive prices from Vietnam. Thailand’s prices dropped further in October in anticipation of a bumper main-season harvest that began this month. Prices have continued to decline through the third week of November. Vietnam is not making any new sales at this time. Vietnam halted quoting export prices in mid-October, a result of tight supplies until its winter- spring harvest begins in February and a record level of sales are already on the books. Price quotes for Vietnam’s 5 percent brokens (FOB Ho Chi Minh City) were reported at $268 per ton for the week ending October 18, up $38 from July. Vietnam is projected to export a record 5 million tons of rice in 2005, a result of competitive prices and a record 2004/05 crop. Vietnam has supplied several markets—especially the Philippines—formerly supplied by Thailand due to more competitive prices and ample supplies. India is quoting mostly export prices for its parboiled rice and basmati rice, not its lower-quality coarse rice. India entered the 2005/06 market year with extremely tight supplies. With the harvest of its main-season kharif crop nearly over, the Government of India will soon reassess its supply situation and set export prices. Pakistan—which just harvested a near-record crop—is currently more competitive than India in the low-quality 25 percent brokens coarse rice market. Similar to Thailand’s intervention purchase program for rough rice, the Government of India purchases milled rice to support prices. The U.S. export price situation varies somewhat by class of rice. Prices for U.S. long grain milled rice—No. 2, 4-percent brokens, (FAS vessel, U.S. Gulf port)—have increased 11 percent since early August. Price increases in September and October were partly due to supply disruptions caused by Hurricanes Katrina and Rita. Price movements the remainder of the market year will be impacted by much higher fuel costs and expectations of stronger global prices. For the week ending November 22, the U.S. price was quoted at $309 per ton, up from $278 at the start of the 2005/06 market year. Price quotes for U.S. California medium grain milled rice have increased sharply since last spring in response to expectations of a much smaller California harvest, a big drop in U.S. medium grain supplies in 2005/06, and a record pace of U.S. medium grain exports in 2004/05. For the week ending November 22, export prices for No. 1, 4-percent brokens California medium grain milled rice (sacked, FOB vessel, Oakland) were quoted at $515 per ton, up from $330 in late May. U.S. Outlook for 2005/06 Bumper Crop, Record U.S. Supplies Projected for 2005/06 U.S. rice supplies are projected to increase 2 percent to a record 273.4 million hundredweight (cwt) in 2005/06, as a big increase in beginning stocks and larger imports more than offset a slightly smaller crop. At 37.7 million cwt, beginning stocks are 59 percent above a year earlier. Despite a slight increase in area, total rice production of 220.7 million cwt is more than 4 percent smaller than a year earlier, a result of an almost 5-percent reduction in the average yield. At 15 million cwt, imports are up 14 percent from a year earlier. Long grain supplies are projected at a record 207.1 million cwt, up 9 percent from 2004/05, a result of a record crop, a much larger carryin, and record imports. In contrast, combined medium/short grain supplies are projected to drop 15 percent to 65.1 million cwt, the smallest since 1999/2000. A 23-percent drop in production is projected to more than offset a larger carryin and increased imports. U.S. 2005/06 Rice Crop Is Projected At a Near-Record 220.7 Million Cwt The 2005/06 (August-July) U.S. rice crop is forecast at 220.7 million cwt (rough basis), down more than 4 percent from a year earlier but second only to the 2004/05 record. This year’s smaller crop is the result of an almost 5- percent reduction in the average yield more than offsetting a slight increase in area. At nearly 3.37 million acres, rice plantings are up 18,000 acres from a year earlier and are the largest since 1999/2000. The average yield, projected at 6,603 pounds per acre, is 339 pounds below the year-earlier record. Weather problems in both California and the South—including two Gulf Coast hurricanes—account for most of the decline in the average yield. Medium grain accounts for all of the decline in U.S. rice production in 2005/06. Total U.S. medium grain production is projected at 44.1 million cwt, a drop of 25 percent from a year earlier and the smallest since 1998. A big drop in medium grain production in California—where most of the U.S. medium grain crop is grown—is responsible for most of the decline in the U.S. medium grain crop. In contrast, both long and short grain crops are projected larger in 2005/06. Long grain production is projected at a record 173.2 million cwt in 2005/06, an increase of nearly 3 percent from a year earlier. Nearly all U.S. long grain rice is produced in the South. The U.S. short grain crop—accounting for 1-2 percent of total U.S. rice production—is projected at 3.4 million cwt, an increase of 6 percent from a year earlier. California produces nearly all U.S. short grain rice, and much of this crop is exported to Japan. In 2005/06, a 102,000-acre increase in plantings in the South more than offset an 84,000-acre reduction in California. Lack of a more profitable cropping alternative—and expectations of slightly higher global trading prices—were responsible for the fractional area expansion in the South. Arkansas accounted for the bulk of the southern area expansion. Rice plantings in Arkansas increased 80,000 acres to a record 1.64 million acres. Mississippi’s rice plantings rose 30,000 acres to 265,000, the highest since 1999. In Missouri, rice plantings are estimated at a record 216,000 acres, an increase of 20,000 acres from a year earlier. Rice plantings declined in 2005/06 in the remaining southern rice growing States. Louisiana’s rice acreage is estimated at 530,000 acres, a drop of 8,000 acres from a year earlier. Southwest Louisiana accounts for the bulk of the State’s rice acreage. Rice is also grown in Northeast Louisiana. Louisiana reports the lowest field yields among U.S. rice growing States. In Texas, rice plantings are estimated at 202,000 acres, down 20,000 from a year earlier. Production costs are higher in Texas than in other southern rice growing States. The 84,000-acre decline in California rice plantings to 511,000 acres was driven by low prices at planting—a result of a record 2004 crop—and an abnormally wet spring. U.S. Average Field Yield Is Projected To Decline 4 Percent to 6,603 Pounds Per Acre In early November, the U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS) forecasted average field yields for 2005/06 at 6,603 pounds per acre, down 339 pounds from the year-earlier record and the first decline since 1998. Weather problems in both California and the South—including two hurricanes that hit the Gulf Coast in August and September—are responsible for the weaker yields in 2005/06. Despite the 5- percent decline, the 2005 yield is the third highest on record. In the South, average yields have risen sharply since 1999, a result of expanded plantings of new, high-yielding long grain varieties, plus generally favorable weather most years across much of the region during critical growing months. Even with this year’s decline, annual yield growth has averaged more than 2 percent since 2000/01, after being virtually stagnant from 1988/89 to 1999/2000. The recent boost in rice yields has largely been due to the release for commercial use of several new high-yielding long grain varieties in the South over the past half-decade. These new varieties include: Cocodrie, Wells, Francis, Cheniere, Priscilla, Lagrue, and Arhent. In addition to planting more conventional high-yielding rice varieties such as Cheniere and Wells, Southern growers are also increasing their acreage of hybrid rice, especially Clearfield varieties. Herbicide-resistant Clearfield varieties have been available in the South since 2001 as an effective means to fight red rice problems. Although hybrids cost more than conventional varieties, they have a higher yield potential and several cost-saving attributes—such as lower nitrogen requirements than non-hybrid varieties. Field yields are projected lower this year for all reporting States except Louisiana and Texas, with California experiencing the largest decline. California’s 2005/06 field is projected at 7,300 pounds per acre, a 1,300-pound drop from the year-earlier record and the lowest since 1999. An abnormally wet spring—which delayed planting—followed by an extremely hot summer account for most of this year’s 4 percent decline in the California field yield. Early plantings typically bode well for California rice yields. Parts of the southern rice growing area were impacted by two hurricanes in 2005. The first, Hurricane Katrina, struck New Orleans on August 29 as a Category 4 storm and moved northeast as it dissipated. The storm brought heavy rains and wind to western Mississippi, causing much of the unharvested rice crop to lodge. The storm did little damage to other Delta rice growing areas. The second, Hurricane Rita, struck East Texas and Southwest Louisiana on September 24 as a Category 3 storm. As the storm dissipated and moved north it brought heavy wind and rain to much of the southern rice growing area, including much of the Delta. Mississippi’s yield is projected at 6,500 pounds per acre, a drop of 400 pounds from the year-earlier record. The Mississippi rice crop was adversely affected by heavy wind and rains from both Hurricane Katrina and Hurricane Rita. The Arkansas field yield is projected at 6,610 pounds per acre, a decline of 300 pounds from the year-earlier record. Arkansas experienced extreme heat and drought this spring and summer followed by severe wind and rain from Hurricane Rita that caused much of the unharvested rice to lodge. Missouri’s field yield is projected at 6,300 pounds per acre, a decline of 500 pounds from the 2004 record. Some of the Missouri rice crop lodged due to rains and wind from Hurricane Rita. Average yields are estimated higher in 2005/06 than a year earlier in both Texas and Louisiana. In Louisiana, the average yield is estimated at 5,850 pounds per acre, an increase of 500 pounds from a year earlier and just 20 pounds below the 2003 record. Hurricane Katrina, which had devastating effects on New Orleans and several other Gulf Coast cities, missed most of the Louisiana rice producing area. By the time Hurricane Rita hit the Gulf Coast rice growing areas on September 24, nearly all of Louisiana’s main crop had been harvested. However, wind and rain from Hurricane Rita plus much higher fuel costs—partly due to damage to refining facilities from Hurricane Katrina—contributed to a smaller Louisiana ratoon crop in 2005. A ratoon crop is the harvest of a partial-second crop from the stubble of the first crop. There is no additional planting and the harvested rice from the ratoon crop is added to the main crop harvest to determine average yield. In the United States, only Gulf Coast producers are able to harvest a ratoon crop, the growing season is too short in the Delta and in California. The average field yield in Texas is estimated at a record 7,200 pounds per acre, up 460 pounds from a year earlier. The Texas rice growing area experienced generally favorable weather in 2005. By the time Hurricane Rita struck the eastern half of the Texas rice growing area in late September, nearly all of the main crop had been harvested. In addition, most of the Texas rice crop is grown west of Houston and this area was not directly affected by Hurricane Rita. However, much like Louisiana, some of the east Texas ratoon crop was damaged by the wind and rain from Hurricane Rita. In both Texas and Louisiana, some stored rice was damaged by Hurricane Rita and some rice producing, milling, and marketing facilities were damaged as well. A Big Drop in the 2005 California Crop More Than Offsets Record Southern Production A 27-percent decline in California’s rice production—plus a slightly smaller Texas crop—are projected to more than offset record crops in 2005/06 in Arkansas and Missouri and larger crops in Louisiana and Mississippi. The California crop is projected at 37.1 million cwt, a decline of 13.7 million cwt from a year earlier and the smallest since 1999. The smaller crop is the result of a 14-percent decline in area and a 15-percent drop in the average yield. Low prices at planting and adverse weather during the spring and summer are responsible for the area and yield declines this year. California prices have risen sharply since last summer in anticipation of a much smaller harvest in 2005/06. California rice supplies are projected to be extremely tight by the end of the 2005/06 market year. Medium grain accounts for more than 92 percent of California’s rice production; short grain accounts for most of the remainder. The State produces 75-80 percent of the U.S. medium grain crop and 98-99 percent of the short grain crop. The Arkansas 2005/06 rice crop is projected at a record 108.1 million cwt, up almost 1 percent from a year earlier. A 5-percent expansion in area more than offset a weaker yield in Arkansas. The record Missouri rice crop of 13.3 million cwt is up fractionally from a year earlier. A 10-percent expansion in rice plantings more than offset a weaker yield. Mississippi’s 2005/06 rice crop is projected at 17.1 million cwt, an increase of 6 percent from a year earlier and the largest since 1999. A 13-percent area expansion in Mississippi more than offset a weaker yield. Finally, the Louisiana rice crop is projected at 30.7 million cwt, an increase of nearly 8 percent from 2004/05 and the largest crop since the 1999 record. A 9-percent increase in the average yield more than offset a slight reduction in Louisiana plantings. A 9-percent cut in rice acreage is behind an almost 2-percent reduction in the Texas rice crop to 14.5 million cwt in 2005/06. A record long grain crop in 2004/05 pushed U.S. prices down during 2004/05, encouraging some Texas landowners not to grow rice in 2005/06. Texas is the only southern rice growing State that harvested a smaller rice crop in 2005/06. About 90 percent of the rice grown in the South is long grain; medium grain accounts for nearly all of the remainder. Mississippi, Missouri, and Texas grow almost exclusively long grain varieties. Arkansas and Louisiana grow long and medium grain rice. However, the bulk of their production is long grain. In recent years Arkansas has accounted for 90 percent of southern medium grain production. Arkansas also plants about 1,000 acres of short grain rice. Total U.S. Rice Supplies Are Projected To Increase to a Record 273.4 Million Cwt Total U.S. rice supplies in 2005/06 are projected at a record 273.4 million cwt, up 2 percent from a year earlier. A big increase in beginning stocks and near-record imports are projected to more than offset a smaller crop. This is the second consecutive year of record total U.S. rice supplies. Based on data from NASS reported in the August 2005 Rice Stocks, beginning stocks for 2005/06 are calculated at 37.7 million cwt, up more than 59 percent from a year earlier. Beginning stocks are estimated to be higher than a year earlier in every reported State. Arkansas accounts for the bulk of the 14-million-cwt increase in beginning stocks in 2005/06. Arkansas’ beginning stocks are estimated to be 17.1 million cwt, up 8 million cwt from a year earlier. At an estimated 12.1 million cwt, beginning stocks in California are 1.6 million cwt larger than a year earlier. Beginning stocks in Louisiana are estimated at nearly 2.5 million cwt, an increase of 1.5 million from August 1, 2004. Beginning stocks are estimated at 1.5 million cwt in Missouri, an increase of more than 0.9 million. Rice crops in Arkansas, California, and Missouri in 2004 were the largest on record at that time, a major factor behind the larger stocks. Beginning stocks in Texas are estimated at 1.4 million cwt, a 0.6-million-cwt increase. Mississippi stocks are estimated at 1.2 million cwt, up 0.3 million cwt from a year earlier. An additional 2 million cwt of beginning stocks were not allocated by State. U.S. rice imports for 2005/06 are projected at 15 million cwt, up almost 14 percent from a year earlier and just fractionally below the 2003/04 record. Both long and combined medium/short grain imports are projected to be larger in 2005/06. Long grain imports are projected at a record 11.25 million cwt, an increase of 7 percent from a year earlier. Thailand is the largest supplier of rice to the United States, accounting for 75-80 percent of U.S. long grain imports. Jasmine rice—Thailand’s high-quality fragrant rice—accounts for nearly all of the long grain rice imported by the United States from Thailand. These purchases increase almost every year. Thailand also currently ships around 60,000 tons (about 2.0 million cwt on a rough rice basis) of rice classified as medium or short grain to the United States each year. India is typically the second-largest shipper of long grain rice to the United States. India accounts for 11-15 percent of annual U.S. rice imports. Pakistan ranks third among the long grain suppliers, accounting for 3-4 percent of U.S. total rice imports. Basmati rice—South Asia’s premier aromatic rice— accounts for virtually all of the U.S. rice imported from India and Pakistan. The United States does not currently grow these specific Asian varieties of basmati and jasmine rice. Thailand, India, and Pakistan are the only exporters of these specific varieties. The United States grows and markets its own aromatic varieties. Combined medium/short grain imports in 2005/06 are projected at 3.75 million cwt, an increase of 40 percent from a year earlier but still well below the 2003/04 record of 5.25 million cwt. Thailand typically supplies about 2.0 million cwt (rough basis) of medium/short grain rice, with imports growing slightly each year. Italy supplies 3,500-4,500 tons of arborio rice—its high- quality medium grain rice used for risotto—each year. Italy barley accounts for 1 percent of total U.S. rice imports and, in contrast to Thailand, India, and Pakistan, its shipment levels are rather steady. Since 2001/02, major increases and decreases in the U.S. medium/short grain import levels have been caused by changes in shipment levels from Australia and China. In 2001/02, Australia shipped 62,000 tons (about 2 million cwt on a rough basis) of medium grain rice to Puerto Rico, the largest U.S. territory. Puerto Rico is considered as part of the U.S. domestic market in USDA’s supply and use analysis. This was the largest amount of rice ever shipped from Australia to the United States. The only previous significant shipments of rice to the United States from Australia had been 10,000-11,000 tons of medium grain in 1998/99 and 2000/01. Large supplies in Australia and competitive prices (including freight rates) were responsible for the big increase in Australia’s exports to the United States in 2001/02. The Jones Act requires shipments from one U.S. port to another U.S. port to be carried on a U.S. flagged vessel. U.S. freight rates are extremely high compared with most other maritime nations. In 2002/03 Australia and China together shipped 77,444 tons of medium grain rice to Puerto Rico, with each exporter accounting for about half the total. A tight supply situation pulled Australia out of the U.S. medium grain market in 2003/04 while China shipped almost 97,000 tons to the United States in 2003/04. Since 2003/04, there have been no significant shipments of medium grain rice from China or Australia to the United States. Supply availability, price competitiveness, and relative freight rates are the main factors that determine whether Puerto Rico purchases rice from the United States or international sources. Total U.S. rice imports 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. 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. Fragrant rices are expected to account for nearly all of the forecasted import growth. Long Grain Supplies Are Projected To Increase in 2005/06; Medium/Short Supplies To Drop Sharply Total supplies of long grain rice—the dominant class of rice grown in the United States—are projected to increase 9 percent in 2005/06 to a record 207.1 million cwt. A huge carryin, a bumper crop, and record imports all support projections for record supplies. Data from the August 2005 Rice Stocks report indicated long grain stocks at the beginning of the 2005/06 market year at 22.7 million cwt, 120 percent above a year earlier. The 173.2-million-cwt long grain crop is 4.3 million cwt larger than a year earlier and the largest on record. Long grain imports are projected at a record 11.25 million cwt, an increase of 7 percent from 2004/05. The medium/short grain supply outlook for 2005/06 is quite different from the long grain outlook. Medium/short grain supplies are projected to drop 15 percent to 65.1 million cwt, the smallest since 1999/2000. A big drop in production is projected to more than offset a larger carryin and increased imports. At 47.6 million cwt, the combined medium/short grain crop is 23 percent below a year earlier and the smallest since 1998/99. A big drop in California production is responsible for most of the decline in U.S. medium/short production. Data from the August 2005 Rice Stocks report indicate beginning stocks of medium/short grain rice at 13.8 million cwt, up 12 percent from a year earlier and the largest since 2001/02. Imports of medium/short grain rice are projected to increase nearly 40 percent to 3.75 million cwt. Tight supplies and higher prices for California medium grain rice account for most of the expected increase in U.S. medium/short grain imports. U.S. 2005/06 Total Rice Use Is Projected at a Record 247.2 Million Cwt Total use of U.S. rice in 2005/06 is projected at a record 247.2 million cwt, up nearly 8 percent from a year earlier. Both domestic use (including the residual or unreported losses and any statistical errors) and exports are projected to be higher in 2005/06. Total domestic and residual use is projected to increase more than 5 percent to a record 126.2 million cwt. U.S. exports are projected at 121 million cwt, up 10 percent from a year earlier and the second highest on record. Milled rice accounts for most of the increase in U.S. exports. Long grain accounts for all of the increase in total use in 2005/06. Total long grain use is projected at a record 188.1 million cwt, up almost 13 percent from 2004/05. Combined medium/short grain total use is projected to decrease 6 percent to 59.1 million cwt. Both domestic use and exports of medium/short grain rice are projected to decline in 2005/06. Ending stocks of all rice are projected at 26.2 million cwt, a decline of 30 percent from a year earlier. Both long and medium/short grain ending stocks in 2005/06 are projected to be smaller than a year earlier. Total Rice Use in 2005/06 Is Projected To Increase Nearly 8 Percent Total rice use—domestic and residual plus exports—in 2005/06 is projected at 247.2 million cwt, up 17.2 million cwt from a year earlier and the highest on record. Both domestic and residual use and exports are projected to be higher in 2005/06. Total domestic use—including the residual, or unreported losses in transporting, processing, and marketing plus any statistical errors—is projected to increase more than 5 percent to a record 126.2 million cwt. Food, industrial, and residual use is projected at a record 122 million cwt, up more than 5 percent from 2004/05. Seed use is projected at 4.2 million cwt, about the same as a year earlier. The domestic market (including residual use) is the largest outlet for U.S. rice, accounting for 51-53 percent of total use annually since 2002/03. From 1990/91-2001/02 the domestic market’s share of total use was 55-59 percent. The decline in the domestic market’s share of total use since 2001/02 has largely been due to stronger exports. The domestic market has nearly doubled in the past 20 years, with total domestic disappearance currently growing at more than 2 percent per year, well ahead of population growth. Food use and beer account for the bulk of domestic disappearance. The residual and seed use account for the remainder. Although both total and per capita use continue to expand, the rate of growth has slowed since the 1980s and 1990s. During the 1980s, the annual growth rate for total domestic use (excluding seed use) was 5 percent. By the early 1990s the growth rate slowed to 4 percent and was about 3 percent during the second half of the 1990s. Since 2001/02 the annual growth rate in domestic use has averaged about 2 percent. The slower growth rate for the past few years was partly due to a shift away from carbohydrates to a protein-based diet. This factor has likely run its course. Processed Foods Are the Fastest Growing Segment of the U.S. Rice Market Based on domestic shipment data reported in the USA Rice Federation’s annual milled rice distribution survey for market year 2003/04—the most recent completed survey—food use accounts for nearly 85 percent of total reported domestic shipments (including imports, but excluding seed and residual use). In addition, food use has been responsible for nearly all survey-reported growth in domestic use over the past decade. Food use of rice includes direct food use (or table rice), processed foods, and pet food. Direct food use— including imports—accounts for about 60 percent of all reported domestic shipments of rice. Use of rice in processed foods—primarily package mixes, cereal, and rice cakes—has been the fastest growing category of food use and accounted for nearly 16 percent of total domestic shipments reported in the 2003/04 milled rice distribution survey. Pet food accounts for about 9 percent of survey reported domestic shipments and uses almost exclusively brokens. Beer use accounted for about 15 percent of domestic rice consumption in 2003/04. The amount of rice used in making beer has been virtually stagnant for more than a decade. Monthly shipments of rice to U.S. brewers are reported by the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Department of Treasury. Seed use—not included in the annual milled rice survey data—is the smallest category of domestic use and is directly proportional to area planted. Over the next decade, both total and per capita rice consumption are expected to continue to rise, with food use accounting for nearly all of the growth. Population growth, ethnic composition of the United States, healthy lifestyles, convenience, and continued introduction of new products using rice are behind expectations of steady growth. Imports’ share of domestic use is expected to increase slightly over the next decade. Expansion in beer use is expected to be fractional. 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 around 26 pounds (not including U.S. territories). Since 2000/01, per capita consumption has grown about 0.3 pound a year, down from a half pound a year in the 1990s and nearly a pound a year in the 1980s. U.S. Rice Exports Are Projected To Be The Second Highest on Record in 2005/06 U.S. rice exports in 2005/06 are projected at 121 million cwt (rough equivalent of both rough and milled rice exports), up 10 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 smaller price difference over Asian competitors are behind expectations of near-record U.S. rice exports in 2005/06. Both rough and milled rice exports are projected to be higher in 2005/06, with milled rice accounting for most of the increase. By class, long grain exports are projected to increase in 2005/06, while combined medium/short exports are projected to decline. U.S. rough rice exports for 2005/06 are projected at 36 million cwt, up more than 2 percent from a year earlier but still 16 percent below the 2002/03 record. Mexico and Central America—the two largest markets for U.S. rough rice—are projected to account for most of the growth in 2005/06. In 2002/03 Brazil imported more than 7.1 million cwt of U.S. rough rice and imported almost 4.7 million cwt in 2003/04. All of the rice was southern long grain in both years. The United States is not expected to ship much—if any—rice to Brazil in 2005/06, a result of ample supplies within the MERCOSUR trading region. Southern long grain accounts for the bulk of U.S. rough rice exports, with most of this rice going to Latin America, primarily Mexico and Central America. Shipments to these two regular buyers typically increase each year. The United States supplies nearly all of the rice imported by both Mexico and Central America (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua). Mexico typically buys a much small amount of U.S. long grain milled rice each year in addition to its purchases of U.S. rough rice. South America is an occasional market for U.S. rough rice. When rice supplies are tight in the region, 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—when South American supplies are tight. Like Brazil, the Andean countries buy very little U.S. rice in years of adequate South American harvests. As a region, South America is typically a net-exporter of rice. 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 (including both rough and milled) declined 69 percent in 2003/04 when Turkey instituted a ban on imports in late 2003. In the summer of 2004 Turkey replaced the outright ban on imports with an “absorption policy” whereby for every ton of rough rice imported one ton of rough rice had to be purchased from domestic stocks. This quota system, plus cumbersome licensing requirements, remains in effect and limits U.S. shipments. The U.S. has filed a case with the World Trade Organization against Turkey because of that country's restrictions on U.S. rice exports. Other regions and countries regularly import smaller amounts of U.S. rough rice. The Caribbean typically imports U.S. rough rice, all long grain. Jamaica regularly imports U.S. rough rice, taking almost 40,000 tons annually in recent years. Jamaica also imports smaller amounts of U.S. milled rice, mostly shipped under food aid programs. In 2001/02 and 2002/03 Cuba imported 38,000- 55,000 tons of rough rice from the United States. However, since 2003/04 Cuba’s imports from the United States have been mostly milled rice. Price competitiveness of U.S. rice, supply availability among competing exporters— primarily Vietnam and China, 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 purchase U.S. rice. The EU-25—mostly Spain and Italy—typically import very small amounts of U.S. rough rice each year, nearly all long grain. Rough rice has become a much larger share of U.S. exports over the past 15 years and now accounts for around 30 percent of total U.S. rice exports (on a rough basis). Prior to 1990/91, rough rice accounted for a very small share of U.S. rice exports, with the EU-25 accounting for most of the purchases. Occasionally Brazil imported larger quantities of U.S. rough rice when regional supplies were tight. U.S. rough rice exports began to expand in the early 1990s when many Latin American countries opened their markets to imported rice and reduced government support to their producers. Most countries in Latin America 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. The United States is the only major rice exporter that allows rough rice exports. 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. U.S. Milled Rice Exports Are Projected To Increase 13 Percent to a Record 85 Million Cwt Combined milled and brown rice exports (on a rough basis) are projected at a record 85 million cwt in 2005/06, up nearly 10 million cwt from a year earlier. Record U.S. supplies, a smaller price difference over Asian competitors, and tight exportable supplies in some competing exporting countries are behind the substantial increase in U.S. milled rice exports in 2005/06. 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—is currently about $40 per ton. In 2004/05 the difference averaged about $48 per ton and was more than $150 per ton in 2003/04. At the start of the 2005/06 market year the difference was about $10 per ton. However, since late September, stronger U.S. prices and weaker prices for Thailand’s rice have expanded the difference. The price difference will have to narrow for the United States to ship 85 million cwt of milled rice in 2005/06. Long grain accounts for the bulk of Thailand’s rice exports. Jasmine rice accounts for most of the remainder. Among major competitors, both China and Australia had relatively tight exportable supplies going into the 2005/06 market year. China exports both long and medium/short grain rice, with its long grain rice mostly going to low quality markets in Sub-Saharan Africa and Asia. Although China’s rice production is projected to be slightly larger in 2005/06, both total supplies and ending stocks in China are projected to be smaller than a year earlier. Australia exports only medium/short grain rice. Both China and Australia typically compete with the United States in the high-quality Northeast Asian markets. Northeast Asia and the EU-25 are the top export markets for U.S. milled rice (including brown rice). 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 its exports to this region in 2005/06 as South Korea agreed to increase its annual WTO purchases through 2014. The South Korean Government is expected to ratify this agreement by the end of 2005. The top U.S. competitors in the Northeast Asian markets—China and Australia—have tight exportable supplies. None of the three Northeast Asian importers is expected to purchase more than their minimum WTO import requirements. The EU-25 purchases mostly brown rice from the United States that is fully milled in Europe. The EU-25 also purchases much smaller quantities of fully milled white 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-25 in 1995. The EU-25 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 assesses fixed duties on all forms of imported rice. The brown rice tariff remains substantially below the tariff for milled rice imports. Both India and Pakistan—who export mostly basmati brown rice to the EU-25—were granted duty abatements under the new policy. To date, this new policy has not reduced U.S. exports to the EU-25. The Middle East and Sub-Saharan Africa are also major markets for U.S. milled rice. However, over the past decade, the United States has lost substantial market share in these regions—especially in Saudi Arabia and the Republic of South Africa—to Asian suppliers. Thailand and India have substantially increased their market share in these two countries, mostly due to lower prices. Both countries purchase mostly high-quality parboiled rice, all long grain. The U.S. currently sells very little rice to South Africa, once a top U.S. market in the region. U.S. sales to Iraq in 2004/05—the first commercial sales since 1990—have partially offset losses in other Middle East markets. The United States is expected to be more price-competitive in the Middle East and Sub-Saharan Africa in 2005/06. Ghana is the only large commercial market for U.S. rice in Sub- Saharan Africa. Food aid accounts for the bulk of U.S. shipments to most other Sub-Saharan African markets. The Caribbean is another major market for U.S. milled rice, nearly all long grain. Haiti is the largest market for the U.S. rice in the region. Some of the U.S. rice to Haiti is shipped as food aid. Cuba is currently the second largest market for U.S. rice in the Caribbean. Cuba has purchased mostly milled rice from the United States since 2003/04, although in prior years Cuba purchased mostly rough rice. The Dominican Republic typically imports smaller amounts of milled rice from the United States. The quantity imported annually largely depends on the production level in the Dominican Republic. Despite a locational advantage for the United States, Thailand has successfully competed in the Caribbean when the U.S. price difference is wide. Recently, South American exporters—Uruguay and Brazil—have shipped 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, mostly long grain. Asia accounts for the remainder of Canada’s rice imports, with aromatic rice the bulk of Canada’s imports from Asia. In some years, the Philippines and Indonesia import U.S. milled rice. These shipments are almost all non-commercial sales, including Title I of the PL 480 Program. Malaysia, Hong Kong, and Singapore purchase very small amounts of U.S. milled rice each year. The United States occasionally ships some milled rice—nearly all food aid—to Central Asia as well. Eastern Europe and non-EU-25 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 global import market for rice, Oceania has substantially increased its purchases of U.S. rice since 2004/05. The region imports medium/short grain milled rice. Australia typically supplied this market, with the United States shipping very small amounts to the region. However, Australia’s rice supplies have been extremely tight since 2002/03 as three consecutive years of drought diminished its harvests. This is the main factor behind the strong growth in U.S. sales and shipments to this small import market since 2004/05. Top buyers of U.S. rice in Oceania include Papua New Guinea, Micronesia, and Western Samoa. Although Australia’s 2005/06 crop is projected to be more than twice the size of its 2004/05 crop, supplies from Australia’s 2005/06 crop will not be available for export until after the March-April harvest. U.S. Long Grain Exports Are Projected To Increase 15 Percent in 2005/06 Long grain accounts for all of the projected increase in total rice use in 2005/06. Total use of long grain rice is projected at a record 188.1 million cwt, up almost 13 percent from a year earlier. Both exports and domestic use of long grain rice are projected higher in 2005/06. Domestic use of long grain rice—including the residual—is projected to increase 10 percent to a record 91.1 million cwt in 2005/06. It is expected that some industrial and processed food users of rice will switch to long grain rice from medium/short grain as medium/short grain prices rise sharply in 2005/06. Substitution among classes of rice for direct food use (also called table rice) is unlikely. Long grain exports in 2005/06 are projected to increase 15 percent from a year earlier to a record 97 million cwt. Record U.S. supplies and a smaller price difference over Thailand are behind expectations of expanded exports of U.S. long grain milled rice in 2005/06. The United States is expected to pick up market share in 2005/06 in price-sensitive markets in the Middle East and Sub- Saharan Africa. Saudi Arabia, Iraq, and Ghana are the major commercial markets for U.S. long grain rice in these two regions. Thailand and India are the major U.S. competitors in the Middle East and Sub-Saharan Africa. Iraq returned as a commercial market for U.S. rice in 2004/05, importing 124,000 tons of U.S. long grain milled rice. Except for food aid shipments in 2001/02 and 2003/04, Iraq had not been a market for U.S. rice since 1990. Iraq was a top market for U.S. rice in the 1980s, importing 400,000-500,000 tons in several years. Iraq is currently a very price-sensitive market. The largest market for U.S. long grain milled rice (including brown rice) is the EU-25. To date, the EU-25’s new rice policy has not hindered U.S. competitiveness in this market. Most U.S. shipments to the EU-25 are brown rice, which faces a much lower tariff than fully milled rice. 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 as well. Rough rice shipments to Latin America—mostly Mexico and Central America—account for the remaining exports of U.S. long grain rice. Rough rice accounts for more than one-third of U.S. long grain exports. The United States faces little competition from Asian suppliers in the rough rice market. Total Use of U.S. Medium/Short Grain Rice Is Projected To Decline 6 Percent in 2005/06 In contrast to the U.S. long grain market, total use of U.S. medium/short grain rice in 2005/06 is projected to decline 6 percent to 59.1 million cwt. Both domestic use and exports are projected to be smaller in 2005/06. Tight supplies and much higher prices account for the expected decline in medium/short grain use. Total domestic use (including residual use) of medium/short grain rice is projected at 35.1 million cwt, down 4 percent from a year earlier. A shift by some processors to lower-priced long grain rice accounts for most of the projected decline in domestic use of medium/short grain. Exports of medium/short grain rice are projected to decline almost 9 percent from the year-earlier record to 24 million cwt. The Middle East and Oceania are expected to account for most of the year-to-year decline in U.S. medium/short grain exports. Northeast Asia—Japan, South Korea, and Taiwan—is expected to account for the bulk of U.S. medium/short grain exports in 2005/06. These markets for U.S. rice are not expected to decline in 2005/06 despite higher U.S. prices. Turkey, Jordan, smaller Middle Eastern markets, and Oceania are expected to account for most of the remainder. The United States will likely face stronger competition in 2005/06 from Egypt in the Middle East and—late in the 2005/06 market year—from Australia in Oceania. Turkey is the only sizable rough rice market for U.S. medium/short grain rice. The other medium/short grain markets import exclusively milled or brown rice from the United States. Japan and South Korea have been major buyers of U.S. medium/short grain rice each year since the mid-1990s. As part of the 1994 Uruguay Round Agreement (which also established the WTO), both Japan and South Korea agreed to partially open their domestic markets to imported rice. Japan’s minimum access imports expanded each year from 1995-2000; South Korea’s expanded from 1995- 2004. In 1999, Japan opted for tariffication, which halved the rate of growth in imports required in 1999 and 2000. Despite Japan’s move to tariffication, there have been no over-quota imports to date. Japan’s import quota remains fixed at 682,000 tons (milled basis) until another agreement is reached. In 2001, as a requirement for joining the WTO, Taiwan agreed to partially open its rice market in 2002 to imported rice. Taiwan’s import requirements remain at the 2002 level of 144,720 tons (brown rice basis) and are fixed until another agreement is reached. In 2005, South Korea renegotiated its commitments, agreeing to double the amount of rice imported annually to almost 408,000 tons (milled basis) by 2014 in return for a 10-year delay in implementing full trade liberalization. Like Japan, neither South Korea nor Taiwan import rice beyond their WTO-agreed levels. Despite the partial opening of these three high-quality markets, the bulk of the rice consumed in each country is still produced domestically. In fact, very little of the imported rice is purchased directly by consumers in any of these three countries. The United States supplies about half of Japan’s annual rice imports and is a major supplier to both South Korea and Taiwan as well. Virtually all of the rice the United States exports to these three Northeast Asian countries is from California, with Japan purchasing about half of California’s rice exports. Australia and China are the major U.S. competitors in the region. In addition, Thailand supplies a small amount of long grain rice to Japan for use in processed products, mostly wine. Japan is the largest global importer of medium/short grain rice and the highest valued market for U.S. rice. The global medium grain market is quite small compared with long grain trade, accounting for just 10-12 percent of total rice trade. WTO imports by Japan, South Korea, and Taiwan account for more than half of the annual global medium/short grain shipments. Turkey—typically the world’s second-largest importer of medium grain rice—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 mostly a rough rice market. Turkey is currently protecting its producers—who just harvested another record crop—from imported rice. Jordan, a market for U.S. rice for nearly 25 years, is the smallest of the regular commercial buyers of U.S. medium grain rice. Jordan imports nearly all milled rice. The country does not grow rice. The United States exports much smaller amounts of medium grain milled rice to Israel and Syria. Since 2004/05 the United States has picked up sales to several countries in Oceania, a region typically supplied by Australia. Papua New Guinea is the largest market in the region and accounted for more than half the record 63,000 tons of U.S. rice shipped to Oceania in 2004/05. All U.S. shipments to Oceania are medium/short grain rice from California. Extremely tight supplies in Australia accounted for the huge boost in U.S. shipments to Oceania in 2004/05. Central Asia has occasionally imported U.S. medium grain 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 under U.S. food aid programs. Uzbekistan has not received any U.S. rice since taking 10,000 tons in 2003/04 and is unlikely to purchase any U.S. rice in commercial markets. U.S. 2005/06 Ending Stocks Are Projected To Decline 30 Percent to 26.2 Million Cwt U.S. ending stocks of all rice for 2005/06 are projected at 26.2 million cwt, down 11.5 million cwt from a year earlier. An almost 8-percent increase in total use is projected to more than offset a 2-percent increase in total supplies. The resulting stocks-to-use ratio is projected at 10.6 percent, down from 16.4 percent a year earlier and the lowest since 1980/81. An ending stocks-to-use ratio this low should keep U.S. rice prices firm throughout the 2005/06 market year. However, the ending stocks situation is quite different by class. Medium/short grain accounts for the bulk of the decline in U.S. ending stocks in 2005/06. Medium/short grain ending stocks are projected to decline 57 percent to 6 million cwt, the lowest since at least 1982/83 when USDA first started reporting supply and use tables by class. A 15-percent contraction in medium/short grain supplies more than offset a 6-percent drop in total use. The medium/short grain stocks-to-use ratio is projected at 10.1 percent, down from 22 percent a year earlier and the lowest since at least 1982/83. Prices for U.S. medium grain rice will face substantial upward price pressure throughout the 2005/06 market year. For long grain rice, ending stocks for 2005/06 are projected at 19.1 million cwt, down 16 percent from a year earlier but still well above levels estimated for 2000/01 and 2003/04. A 9-percent increase in long grain supplies was more than offset by a 13-percent rise in total long grain use. Despite the projected 3.6-million-cwt decline in long grain ending stocks, only a modest increase in long grain prices is likely in 2005/06. In fact, the main factor expected to push U.S. long grain prices up in 2005/06 is higher world prices. The resulting long grain stocks-to-use ratio is projected at 10.1 percent, down from 13.6 percent a year earlier but still well above ratios calculated for 2000/01 and 2003/04. U.S. Average Farm Price and Global Prices Are Expected Higher in 2005/06 The U.S. season-average farm price (SAFP) for 2005/06 is projected at $7.75- $8.05 per cwt, up from $7.33 a year earlier. The year-to-year increase in the U.S. SAFP is largely driven by much higher U.S. medium/short grain prices—a result of a weak harvest in California—and higher global trading prices. Through mid-October, the simple-average of reported monthly cash prices for 2005/06 was $6.78 per cwt; indicating prices will have to rise for the remainder of the marketing year. Little of the 2005/06 California crop had been marketed by mid-October. Monthly cash prices are expected to increase as the California crop is marketed this fall and winter. The main factor pushing U.S. long grain farm prices higher will be 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 2005 are estimated at 149,010 tons, down from 214,120 tons a year earlier. U.S. 2005/06 Season-Average Farm Price Is Projected To Increase to $7.75 to $8.05 Per Cwt The 2005/06 U.S. season-average farm price (SAFP) is projected at $7.75 to $8.05 per cwt, up from $7.33 a year earlier. The higher U.S. SAFP in 2005/06 is primarily due to a 15-percent drop in U.S. medium/short supplies and higher global trading prices, especially for medium grain. Milled rice accounts for the bulk of global rice traded, with long grain making up about 75 percent of traded rice, medium grain about 12 percent, aromatic rice almost 12 percent, and glutinous (or sweet) rice most of the remainder. Global trading prices are expected to increase for a second consecutive year due to tighter world supplies and higher prices for this year’s intervention purchases of rough rice by the Government of Thailand. Despite higher global trading prices in 2005/06, increases in U.S. long grain rough rice prices will be limited by a bumper crop and record U.S. supplies. Through mid-October 2005, the simple average (not weighted by marketings) of U.S. monthly reported cash prices—including any remaining 2004-crop sales—was $6.78 per cwt, well below the projected SAFP for 2005/06, indicating U.S. prices will have to increase during the remainder of the market year. Most of the increase will be accounted for by marketing of the California crop beginning in late October. California typically starts its harvest in late September, however this year’s harvest got off to a delayed start due to late planting and some weather problems later in the season. Average U.S. monthly reported cash prices for rough rice declined over the August 2004-July 2005 market year, a result of a record 2004/05 U.S. crop and the largest supplies to date. In September 2005, USDA estimated the average cash price at $6.95 per cwt, up $0.41 from a month earlier and the highest since June. Even with the September increase, U.S. monthly cash prices have been below a year earlier every month since November 2004. The October 2005 mid-month price was estimated at $6.85 per cwt, down 10 cents from September. However, marketing of the California crop in the second half of the month will likely raise the final October estimate from the mid-month estimate. Price quotes for U.S. long grain rough rice have risen in every producing region since the start of the 2005/06 market year in August. Uncertainty over the level of hurricane damage to harvested and unharvested rice and much higher fuel prices accounted for much of the price increase early in the market year. Prices have also increased due to a reluctance of producers to sell in the face of expected higher prices. These factors have more than offset the impact of a record long grain harvest in 2005/06. Prices for the remainder of the 2005/06 market year will be impacted by expectations of higher global prices. Based on data from the weekly Creed Rice Market Report, average price quotes for long grain rough rice in the Delta—which produces the largest share of the U.S. long grain crop—increased from $5.75 per cwt at the start of the 2005/06 market year in early August, to $6.75 by early October. Price quotes in the Delta were unchanged through early November and then increased 25 cents to $7.00 by mid-month. In Southwest Louisiana, long grain rough rice prices were quoted at $7.15 in mid-November, up from $5.75-$5.95 in August. In Texas, long grain rough rice prices were quoted at $7.34 per cwt in mid-November, up from $6.20 in early August. There have been few reported price quotes for 2005-crop California medium grain rough rice. Most of the California crop is sold under a “pooling” method of marketing. Under a pooling method of marketing, where the 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. Based on the reported sales price for California milled rice (including Japan’s 2005 WTO purchases), California medium grain rough rice prices in mid-November are calculated at $11.86 per cwt, up from $6.20 at the end of the 2004/05 market year. A much smaller California crop in 2005/06, a big decline in U.S. medium grain supplies, and tight supplies in Australia are behind the much stronger California prices. California supplies most of the U.S. medium grain rice exported, the bulk of the medium grain used for table rice (direct food use) consumption in the United States, and much of the medium grain used in beer and processed foods. In the Delta, where most of the southern medium grain crop is produced, price quotes for medium grain rough rice have risen from $6.66 per cwt in August to $9.45 by mid-November. The sharp increase in southern medium grain prices is due to the much stronger California prices and a smaller southern medium grain harvest. The September 2005 Crop Production reported southern medium grain acreage down 54,000 acres from a year earlier, with Arkansas accounting for most of the decline. California medium grain prices are typically higher than southern medium grain prices. Most southern medium grain rice is used in processed products in the United States. Some processors will substitute southern medium grain for California medium grain if the price difference is wide enough. On occasion, some Middle Eastern markets have taken southern medium grain rice if California prices are too high. Also, Puerto Rico will often shift between regions if price differences for medium/short grain rice are wide. Marketing Loan Gains for 2005/06 Averaged $0.85 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 by class is the difference between the adjusted world price (reported by USDA every Tuesday) and the loan rate. Since the spring of 1999, the adjusted world price has remained below the loan rate each week, making U.S. rice producers eligible for marketing loan benefits. Through mid-November 2005, the 2005/06 payment rate for all rice averaged $0.85 per cwt (simple weekly average), up from a $0.58-weighted-average in 2004/05 but well below the 2003/04 weighted average of $2.52 per cwt and the 2002/03 weighted-average of $3.32. The adjusted world price dropped from June 2005 through late September, causing the payment rate to increase. However, in October and November the adjusted world price increased, reducing the payment rate. The medium and short grain adjusted prices accounted for most of the increase in October and November. From August 1995 until late March 1999, the adjusted world price exceeded the loan rate each week; 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 pushed the weighted- average payment rate to $1.94 in 1999/2000 and to $3.11 in 2000/01. Despite a slight strengthening of the adjusted world price in 2001/02, the weighted- average payment rate actually rose 25 cents to $3.36 per cwt. For 2002/03, the average payment rate dropped fractionally to $3.32 per cwt. The payment rate began to decline in May 2003 when world prices started increasing, primarily due to tighter global exportable supplies, especially in India where a weak monsoon cut 2002/03 production. China’s supply situation was tightening as well, as production had contracted a fifth consecutive year and estimated stocks declined from 82.2 million tons in 2001/02 to 67.2 million in 2002/03. From a payment rate of $3.43 per cwt in early May 2003, the rate declined to $2.54 by August. The rate was nearly unchanged until December 2003 when world prices increased and the payment rate began dropping again. In early 2004, China began to purchase non-fragrant milled white rice in the global market for the first time since the mid-1990s, boosting global prices higher. By mid-March 2004, the payment rate was below $2 per cwt for the first time since February 2000. By May 2004, the average payment rate was less than $1 per cwt, the lowest since July 1999. The payment rate remained between $0.60-$0.80 until late October 2004 when global prices increased in anticipation of Thailand’s 2004 main-crop rough rice intervention purchases. Thailand’s intervention purchase prices in 2004/05 were higher than a year earlier. By late December 2004, the payment rate had declined to just 20 cents per cwt. The payment rate increased to 40-50 cents per cwt in the winter and spring of 2005 as global prices dropped slightly on weaker demand and large supplies in Vietnam. Prices continued declining during July with the payment rate exceeding $1 per cwt by the end of the month. Prices were virtually unchanged until late September 2005 when prices, especially for medium and short grain rice, began rising due to tighter supplies. The payment rate declined to $.64 by mid-November. U.S. Food Aid Purchases for Rice Declined 30 Percent in FY 2005 Total U.S. food aid purchases for rice for fiscal 2005 (October 2004 to September 2005) are estimated at 149,000 tons, down 65,100 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 just 3.5 percent of total U.S. rice exports in fiscal 2005, down from 5.8 percent a year earlier. In fiscal 2004, total U.S. food aid purchases (including Title I sales) totaled 214,100 tons, down from 309,600 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 2005, total purchases under PL 480 Title I (concessional sales) were 65,186 tons, up from 58,177 tons a year earlier. The Philippines was the only Title I recipient in fiscal 2005 and fiscal 2004. Total purchases under PL 480 Title II, or food donations, accounted for 59,720 tons in fiscal 2005, down from 71,220 tons in fiscal 2004. Burkina Faso was the largest recipient of Title II donations in fiscal 2005, taking almost 12,000 tons. Sierra Leone ranked second taking 6,500 tons and Madagascar—receiving almost 6,000 tons— was third. Other recipients of Title II donations in fiscal 2005 receiving at least 3,000 tons were: Benin, Colombia, Guatemala, Haiti, Honduras, and the United Arab Emirates. In addition, about 21,000 tons of rice were purchased in fiscal 2005 under the Food for Progress program, down from 55,300 tons in fiscal 2004. At 11,000 tons, Cameroon was the largest recipient in fiscal 2005. Mauritania ranked second receiving 5,000 tons. Jamaica received 4,000 tons; Cambodia and Guinea each received much smaller amounts. There have been no Section 416(b) allocations or purchases since fiscal 2002. Purchases under the Food for Education program totaled 3,150 tons in fiscal 2004. Mozambique received 2,200 tons, Kyrgyzstan and Nicaragua accounted for the remainder. In fiscal 2004, Title I purchases for rice totaled 58,177 tons, down 59,640 tons from a year earlier. The Philippines accounted for all of the Title I sales in fiscal 2004. In addition, 71,220 tons of rice was purchased in fiscal 2004 under PL 480 Title II, down 73,620 tons from a year earlier. Major recipients of Title II purchases in fiscal 2004 were Indonesia (15,180 tons), Benin (6,350 tons), Niger (6,310 tons), Madagascar (6,000 tons), the United Arab Emirates (5,450 tons), Sri Lanka (5,360 tons), Guatemala (4,390 tons), Mozambique (4,000 tons) and Sierra Leone (4,000 tons). U.S. rice purchased under the Food for Progress program totaled 55,300 tons in fiscal 2004, up 8,370 tons from a year earlier. Indonesia was the largest recipient, receiving 15,000 tons. Cote d’Ivoire ranked second, receiving 12,000 tons, Cameroon received 11,000 tons, and Senegal received 10,500 tons. Food for Education purchases for fiscal 2004 totaled 29,400 tons. Cote d’Ivoire was the largest recipient, receiving 7,780 tons. Other major recipients included Ghana (5,780 tons), Mozambique (4,800 tons), Afghanistan (2,240 tons), Guatemala (2,140 tons), and Cambodia (2,010 tons). In fiscal 2003 there were no purchases under the Food for Education Program. The 23,700 tons programmed under the Food for Education program for fiscal 2003 were purchased early in fiscal 2004. Recap of 2004/05 U.S. Rice Market Record Crop Pushed U.S. Season-Average Farm Price Down 9 Percent U.S. rice supplies increased 11 percent to 267.7 million cwt (rough basis) in 2004/05, as a record crop more than offset a smaller carryin and weaker imports. Total supplies at the time were the largest on record, with both long and combined medium/short supplies larger than a year earlier. Total use of rice in 2004/05 is estimated at 230 million cwt, nearly 6 percent above a year earlier. Both exports and domestic and residual use were higher in 2004/05, with medium/short grain exports the largest on record. Ending stocks of all rice increased 59 percent to 37.7 million cwt, with long grain accounting for the bulk of the increase. The 11-million-cwt increase in total U.S. rice supplies more than offset the impact of higher global prices in 2004/05, pushing the U.S. season-average farm price down 9 percent from a year earlier to $7.33 per cwt. Tighter global supplies were the primary reason global trading prices strengthened in 2004/05. Higher prices for Thailand’s intervention purchases supported global prices as well. Larger Plantings and a Record Yield Boosted the U.S. 2004/05 Crop 16 Percent to a Record 230.8 Million Cwt The 2004/05 U.S. rice crop is estimated at 230.8 million cwt, up nearly 31 million cwt from a year earlier and the largest on record. The larger crop was the result of an 11-percent increase in plantings to 3.35 million acres and a 4-percent increase in the average yield to a record 6,942 pounds per acre. The 2004/05 area expansion was primarily due to higher U.S. prices at planting—a result of rising global prices and a tight supply situation in the United States. The 2004/05 yield was up 272 pounds per acre from a year earlier and was the fifth consecutive year of a record average field yield. Extremely favorable growing conditions in most U.S. rice-producing regions plus continued adoption of new, higher-yielding southern long grain varieties were behind the record U.S. field yield in 2004/05. For all three classes of rice—long, medium, and short—plantings increased in 2004/05. Long grain plantings increased 11 percent to 2.59 million acres. Virtually all U.S. long grain rice is grown in the South. Plantings of medium grain rice rose 10 percent to 711,000 acres. California—where more than 70 percent of the U.S. medium grain acreage is located—accounted for all of the medium grain area expansion. Medium grain plantings actually declined in the South. Plantings of short grain rice—which accounts for 1-2 percent of U.S. rice production—were estimated at 49,000 acres, up 6,000 acres from 2003/04. California produces almost all of the U.S. short grain crop. Production was larger in 2004/05 for all three classes of rice. Long grain production is estimated at 168.9 million cwt, an increase of more than 13 percent from a year earlier. At the time, the 2004/05 crop was the largest on record. The long grain yield, the highest on record, was up 2 percent from a year earlier. Medium grain production increased 22 percent from a year earlier to 58.7 million cwt, a result of both expanded plantings and a record yield. California accounted for all of the increase in medium grain production in 2004/05; southern production declined. The U.S. short grain crop is estimated at 3.23 million cwt, up 19 percent from a year earlier and the largest since 1999/2000. A 14-percent increase in plantings and a 5-percent increase in the average yield were responsible for the larger U.S. short grain crop. Much of the U.S. short grain crop is exported to Japan. Rice Production Increased in 2004/05 In All Reported States Rice acreage increased in 2004/05 in all reporting States except Mississippi where area was unchanged from 2003/04. Arkansas, California, and Louisiana accounted for 81 percent of the 325,000-acre increase in total planted area. At 1.56 million acres, Arkansas’ rice acreage was up nearly 7 percent from a year earlier. California expanded rice plantings 17 percent to a near-record 595,000 acres. California prices were quite high at planting due to a 9- percent drop in production in 2003/04. In Louisiana, rice plantings expanded 18 percent to 538,000 acres. Texas rice acreage increased 23 percent to 222,000 acres, the highest since 1999. Yields were higher in 2004/05 than a year earlier in all reported States except Louisiana where yields declined. Arkansas, California, Mississippi, and Missouri all reported record yields in 2004/05. Weather conditions during the 2004/05 growing season were quite favorable in most U.S. growing regions. The Arkansas 2004/05 record average yield is estimated at 6,910 pounds per acre, an increase of 300 pounds from a year earlier. At a record 6,900 pounds per acre, field yields in Mississippi were up 100 pounds from 2003/04. Missouri’s record yield is estimated at 6,800 pounds per acre, up 670 pounds from a year earlier. California’s record yield of 8,600 pounds per acre was up 900 pounds from a year earlier. California’s previous record yield—achieved in 1991, 1992, and 1994—was 8,500 pounds per acre. In contrast to other reporting States, Louisiana’s average yield declined 9 percent to 5,350 pounds per acre. The reduced yield was caused by heavy rains, disease, swings in temperature, and a lack of sunshine. Rice production increased in 2004/05 in all reported States, with California and Arkansas accounting for the bulk of the 30.9-million-cwt increase. Crops were the largest on record at the time in Arkansas, California, and Missouri. California’s 50.8-million-cwt crop was 30 percent larger than a year earlier, a result of expanded plantings and a record yield. Rice production in Arkansas increased 12 percent to 107.4 million cwt, also due to expanded area and a record yield. Larger plantings and a record yield boosted Missouri’s rice crop 27 percent to 13.3 million cwt. At 16.1 million cwt, Mississippi’s 2004/05 crop was up almost 2 percent from a year earlier, a result of a record yield. In Louisiana, expanded plantings offset a weaker yield, increasing rice production 8 percent to 28.5 million cwt. The Texas rice crop, estimated at 14.7 million cwt, was 24 percent larger than a year earlier, mostly due to expanded plantings. Record Production Boosts Total Rice Supplies 11 Percent in 2004/05 Total U.S. rice supplies in 2004/05 are estimated at 267.7 million cwt, up 26 million cwt from a year earlier. Total supplies were the largest on record at the time. A big increase in production more than offset a smaller carryin and weaker imports. Beginning stocks are estimated at 23.7 million cwt, an almost 12-percent drop from a year earlier and the lowest since 1999/2000. Long grain accounted for all of the decline in beginning stocks; medium/short grain beginning stocks were higher than a year earlier. Arkansas accounted for the bulk of the 3.09-million-cwt decline in beginning stocks. In contrast, beginning stocks were up 1.8 million cwt from a year earlier in California. The 2004/05 record crop of 230.9 million cwt was nearly 16 percent larger than a year earlier. The United States imported 13.2 million cwt of rice in 2004/05, a decrease of 12 percent from a year earlier and the lowest since 2001/02. Medium/short grain accounted for all of the decline in U.S. rice imports in 2004/05. By class, total long grain supplies increased 9 percent to 189.7 million cwt in 2004/05. A bumper long grain crop and record imports more than offset a smaller carryin. At 10.3 million cwt, long grain beginning stocks were 34 percent below a year earlier and the smallest since 1996/97. The 2004/05 long grain crop of 168.9 million cwt was up 19.9 million cwt from 2003/04 and was the largest on record at the time. Long grain imports increased more than 7 percent to 10.5 million cwt. Nearly all U.S. long grain imports are fragrant rices from Thailand, India, and Pakistan. Thailand—the largest supplier— accounted for most of the increase in imports in 2004/05. For combined medium/short grain rice, total supplies increased 16 percent in 2004/05 to 76.8 million cwt, the largest since 1983/84. A larger carryin and bumper crop more than offset weaker imports. At 12.4 million cwt, beginning stocks of medium/short grain rice were 33 percent above a year earlier. Combined medium/short grain production of 61.9 million cwt was up 22 percent from a year earlier. California accounted for all of the increase in medium/short grain production. Imports of medium/short grain rice declined 49 percent from the year earlier record to 2.7 million cwt. Reduced shipments from China accounted for nearly all of the decrease in U.S. medium/short grain imports in 2004/05. Puerto Rico—the largest U.S. territory—imported substantial amounts of medium/short grain rice from China in 2002/03 and 2003/04. In 2004/05 Puerto Rico imported very little, if any, rice. U.S. Rice Exports Increased 7 Percent To 110.4 Million Cwt in 2004/05 Total use for 2004/05 is estimated at 230 million cwt, up almost 6 percent from a year earlier. Both total domestic and residual use and exports were higher than a year earlier in 2004/05. At 119.7 million cwt, total domestic and residual use was up 4 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 115.5 million cwt, 4 percent 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 the production, stocks, and trade estimates. The residual is impossible to measure and can vary substantially from year-to-year. Seed use for planting the 2005/06 crop was calculated at 4.15 million cwt, fractionally above a year earlier. Total U.S. rice exports in 2004/05 are estimated at 110.4 million cwt, up 7 percent from a year earlier but still more than 11 percent below the 2002/03 record. Milled rice accounted for the bulk of the year-to-year increase in exports. Exports were higher in 2004/05 for both long and medium/short grain rice. Record supplies and a much smaller price difference over Asian competitors were the main factors driving the expansion in total U.S. rice exports in 2004/05. U.S. rough rice exports in 2004/05 are estimated at 35.2 million cwt, up more than 2 percent from a year earlier. Much stronger shipments to Central America and Turkey more than offset a 4.8-million-cwt reduction in Brazil’s imports and slightly weaker shipments to Mexico. Turkey is the only significant market for U.S. medium rough rice. All other rough rice markets take U.S. southern long grain. The United States faces very little competition from Asian exporters in the rough rice markets. In some years, Australia has shipped rough rice to Turkey and the United States faces competition from Egyptian milled rice in Turkey. Central America and Turkey Increased Imports of U.S. Rough Rice in 2004/05 Central America was the largest export market for U.S. rough rice in 2004/05, importing a record 724,190 tons. Nicaragua and Costa Rica were the largest buyers, each taking around 177,000 tons, a record quantity for both importers. Rice production in Costa Rica and Nicaragua has declined in recent years. Honduras increased imports of U.S. rough rice 5 percent to 132,339 tons. Honduras produces very little rice. Panama imported 73,758 tons in 2004/05, up from none a year earlier and the largest amount of rough rice ever imported by Panama. Panama’s 2004/05 rice crop was sharply reduced by a pest infestation. Panama is typically a small market for U.S. rice. Guatemala and El Salvador increased purchases of U.S. rough rice in 2004/05 as well. The United States supplies almost all of the rice imported by Central America, with rough rice— all long grain—accounting for more than 90 percent of shipments to the region. A small amount of U.S. milled rice is donated as food aid to the region each year. Mexico was the second largest U.S. rough rice export market in 2004/05. Mexico purchased 634,069 tons, a drop of about 6 percent from a year earlier. About 90 percent of Mexico’s rice imports are rough rice; brown and fully milled rice account for the remainder. Long grain accounts for 99 percent of Mexico’s rice imports. The United States supplies virtually all of Mexico’s rice imports. While consumption in Mexico increases every year, production peaked in the mid- 1980s and is not expected to significantly increase in the future. Turkey imported 169,000 tons of U.S. rough rice in 2004/05; about four times the level imported a year earlier. In August 2004 Turkey announced it would end its outright ban on imports in November—the ban had been in place since September 2003—and allow foreign rice under a quota system. Under the quota system, the government administers an “absorption” policy that requires 1 ton of domestic rough rice to be purchased for each ton of rough rice imported. The quota system, plus cumbersome licensing requirements, continue to limit U.S. shipments to Turkey. Turkey imported about 6,000 tons of U.S. milled rice in 2004/05. Turkey was primarily a milled rice market for the United States until the mid-1990s. Cuba and Spain imported much smaller amounts of U.S. rough rice in 2004/05. U.S. Milled Rice Exports Increased Sharply To Iraq, Sub-Saharan Africa, and Oceania Combined milled and brown rice U.S. exports (on a rough-equivalent basis) increased more than 9 percent in 2004/05 to 75.2 million cwt. Northeast Asia, the Middle East, Sub-Saharan Africa, the EU-25, the Caribbean, and Canada were the largest markets for U.S. milled rice in 2004/05. Iraq, Sub-Saharan Africa, Oceania, and Peru accounted for most of the increase in U.S. milled rice exports in 2004/05. In contrast to these expanding markets, U.S. shipments of milled rice to the Philippines, Cuba, the Dominican Republic, and Haiti declined. Iraq imported 123,565 tons (product-weight) of U.S. rice in 2004/05—all long grain milled rice, the first commercial shipments since 1989/90. Sub-Saharan Africa imported nearly 310,000 tons of U.S. rice in 2004/05—all fully milled or brown long grain rice—up almost 83,000 tons from a year earlier and the largest since 1995/96. Ghana, currently the only substantial commercial market for U.S. rice in the region, accounted for the bulk of the increase. Ghana imported a record 166,400 tons of U.S. rice in 2004/05, up 80,000 tons from a year earlier. Abundant supplies and very competitive prices accounted for the increase. Oceania imported a record 63,282 tons of U.S. rice—all medium/short grain milled—in 2004/05, up nearly 54,000 tons from a year earlier. Lack of exportable supplies in Australia, the traditional supplier to the region, accounted for most of the U.S. expansion. Papua New Guinea was the largest U.S. market in Oceania, importing almost 38,000 tons of U.S. rice. A weak crop boosted U.S. milled rice exports to Peru by a factor of 10 to nearly 47,600 tons. Canada increased its imports of U.S. rice—all milled or brown—27,710 tons to a record 227,735. Long grain accounts for about two-thirds of Canada’s rice imports from the United States. Medium/short grain accounted for the remainder. U.S. shipments to Northeast Asia (Japan, South Korea, Taiwan, and Hong Kong) dropped 21,200 tons to 501,370 in 2004/05. Shipments to Japan—the largest buyer—and Taiwan were slightly lower than a year earlier. These reductions were nearly offset by stronger exports to South Korea and Hong Kong. The reduction in shipments to Japan was due to the timing of its WTO purchases; Japan’s imports from the United States average about 350,000 tons a year. All U.S. shipments to Japan, South Korea, and Taiwan are purchased as part of WTO agreements. Hong Kong is a small market for U.S. rice. U.S. exports to the EU-25 increased almost 20,000 tons to 272,000. Brown rice accounts for 85-90 percent of U.S. shipments to the EU-25; fully milled rice accounts for most of the remainder. The United States faces stiff competition in several price-sensitive markets— primarily the Middle East, Sub-Saharan Africa, and Western Europe—from Asian suppliers. In 2004/05, the price difference between U.S. southern long grain milled rice and Thailand’s 100 percent Grade B averaged $48 per ton (simple average of weekly price differences), down from $154 a year earlier. By class, long grain exports increased 4 percent to 84.1 million cwt in 2004/05. Long grain shipments were stronger than a year earlier to Central America, the Middle East (mostly Iraq), and Sub-Saharan Africa (mostly Ghana). In contrast, U.S. shipments to Brazil, Mexico, the Philippines, and the Caribbean declined from a year earlier in 2004/05. Combined medium/short grain exports increased nearly 18 percent to a record 26.3 million cwt. Turkey and Oceania accounted for the bulk of the increase. A record California crop, competitive prices, and extremely tight supplies in Australia were behind the big boost in U.S. medium/short exports in 2004/05. U.S. 2004/05 Ending Stocks Dropped 12 Percent to 23.7 Million Cwt Ending stocks of all rice for 2004/05 are calculated—from data reported in the August 2005 NASS Rice Stocks—to be 37.7 million cwt, an increase of 59 percent from a year earlier. Both long and combined medium/short grain ending stocks are estimated to be higher than a year earlier, with long grain accounting for most of the increase. An almost 11-percent increase in total supplies more than offset a near 6-percent increase in total use. The stocks-to-use ratio was 16.4 percent, up from 10.8 a year earlier. Stocks were reported larger than a year earlier in every reported State, with Arkansas accounting for more than half the 14-million-cwt increase in ending stocks. By class, long grain ending stocks increased 120 percent to 22.7 million cwt, the highest since 2001/02. A 9-percent increase in total supplies more than offset a 2-percent expansion in total use. The long grain stocks-to- use ratio was 13.6 percent, up from 6.3 percent a year earlier. Medium/short grain rice ending stocks increased 12 percent to 13.8 million cwt. A 16- percent increase in total supplies more than offset a 17-percent rise in total use. Despite the larger carryout, the stocks-to-use ratio dropped fractionally to 22 percent. The 2004/05 U.S. season-average price was reported at $7.33 per cwt, down from $8.08 a year earlier. The 11-percent increase in U.S. supplies was the primary factor driving U.S. prices lower in 2004/05. Global trading prices were actually higher in 2004/05 than a year earlier; a result of tighter global supplies and higher prices for Thailand’s intervention purchases. Monthly reported cash prices declined from $8.96 per cwt in August 2004 to $6.78 in July 2005. Prices were below a year earlier each month after October. The July 2005 price was the lowest since September 2003. Reported price quotes for both long and medium grain rice dropped during the 2004/05 market year. International Outlook for 2005/06 Tighter Supplies To Raise Global Trading Prices in 2005/06 Global trading prices were about 5 percent higher than a year earlier for the week ending November 21, primarily due to tighter global rice supplies. Despite a 1-percent increase in world rice production in 2005/06, total rice supplies are projected to be 2 percent smaller than a year earlier, the fourth consecutive year of declining global rice supplies. Exportable supplies were already tight in China, India, and Australia going into the 2005/06 market year. China, Thailand, Burma, Nigeria, Bangladesh, Australia, and Indonesia account for the bulk of the projected increase in 2005/06 global rice production. Global ending stocks for 2005/06 are projected at 64.7 million tons, 11 percent below a year earlier and the smallest since 1982/83. This is the fifth consecutive year of declining global ending stocks. China accounts for most of the current and longer-term decline in global rice stocks. The U.S. price difference over comparable grades of Thailand’s rice was about $42 per ton for the week ending November 21, down from almost $90 a year earlier, as U.S. prices have declined and Thailand’s prices have risen over the past 12 months. The difference had narrowed to less than $10 per ton in August before U.S. prices started increasing in September and Thailand’s prices began dropping in October prior to Thailand’s main-crop harvest that began this month. Despite Larger Production, Global Rice Supplies Are Projected To Decline 2 Percent in 2005/06 World rice production is projected at 406.1 million tons (milled basis) in 2005/06, up 1 percent from a year earlier but still fractionally below the 1999/2000 record of 408.8 million tons. China accounts for the largest share of the 2005/06 global production increase. Despite larger production in 2005/06, global rice supplies are projected to decline 2 percent to 478.9 million tons, the smallest since 1993/94. This is the fourth consecutive year of declining global rice supplies. Global rice area harvested is projected at 151.7 million hectares, up 2.3 million from a year earlier, but still 3.6 million hectares below the 1999/2000 record. In 2005/06, larger plantings in India, China, Thailand, Sub-Saharan Africa, and Burma are projected to more than offset smaller plantings in South America, the EU-25, Japan, and South Korea. At 3.99 tons per hectare, the average global rough rice yield is virtually unchanged from the year-earlier record. Despite this year’s near-record average field yield, yield growth since 1999/2000 has been fractional. After increasing substantially from the late 1960s—when the International Rice Research Institute (IRRI) first introduced the modern, short-statue, high-yield varieties in Asia—through the 1980s, yield growth has slowed considerably. 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 the Green Revolution “Miracle Rice” varieties developed by IRRI for irrigated ecosystems are major limiting factors. 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. Hybrid varieties, which typically achieve higher yields than conventionally developed varieties, have been recently introduced and commercially grown in some South and Southeast Asian countries—primarily the Philippines. However, except for China, where hybrid varieties account for more than half of planted area, the amount of rice area in Asia currently planted with hybrid varieties is extremely small. China has been growing hybrid rice since in the 1970s and was the first country to produce hybrid rice. High seed costs severely limit the expansion of hybrid varieties in South and Southeast Asia. It is not clear that producers would plant hybrid varieties in these regions without subsidized seeds. The International Rice Research Center is currently developing new, much higher-yielding “Super Rice” varieties that may boost yields up to 25 percent. Adoption of these new varieties is currently limited to extremely small areas in a few locations in Asia, making their current impact on global production levels negligible. It is too early to determine the level of adoption and the long-term impact of Super Rice on global yield growth. China Accounts for the Bulk of the 2005/06 Global Production Increase China, the world’s largest rice-producing country, accounts for the bulk of the 2005/06 global production increase, with China’s rice production projected at 127.4 million tons (milled basis). The crop is 2-million-tons larger than a year earlier, but well below the record 140.5 million tons produced in 1997/98. China expanded rice area 2 percent to 29 million hectares in 2005/06, the largest since 2000/01. The yield is projected to be fractionally below a year earlier due to some weather problems in major growing areas. Despite the larger crop, rice supplies in China in 2005/06 are expected to decline for a sixth consecutive year, as consumption is projected to exceed production by almost 8 million tons. In 2005, China maintained the grain policy it adopted a year earlier that provided direct subsidies to farmers to grow rice and eliminated some taxes on grain producers. In early 2004, China reversed its grain policy that had been designed in 1999 to lower grain production and reduce stocks from excessive levels accumulated after the mid-1990s. Consumer prices for rice rose substantially in China in the second half of 2003/04, a result of tighter grain supplies. China responded to the higher rice prices by changing its grain policy, increasing rice imports, reducing rice exports, and releasing government rice stocks in some provinces. The combination of higher grain prices and—to a lesser degree—the policy changes, boosted rice area 7 percent in 2004/05. China is virtually self-sufficient in rice, with imports and exports currently accounting for a very small share of total supply and use. China was a major rice exporter most years from the mid-1960s to 2003, typically exporting up to 1-2 million tons of rice annually. The late 1980s and mid-1990s—when China was a net-importer—were exceptions. Due to tight supplies in 2004, China sharply reduced exports and began—for the first time in about a decade— importing substantial amounts of regular milled white rice from Southeast Asia. Prior to 2004, in most years China’s imports were nearly all premium fragrant rice from Thailand purchased primarily for high-income urban consumers. Since 2005, China has purchased almost exclusively fragrant rice—mostly from Thailand—and has not returned to the global market for non-fragrant rice. China has announced it intends to remain self-sufficient in rice and will likely continue to export a small amount of rice annually. Bangladesh, Thailand, Burma, Nigeria, Indonesia, and Australia Are Projected To Produce Larger Crops in 2005/06 Several rice exporting countries are projected to harvest larger crops in 2005/06. However, among the top five exporters—Thailand, Vietnam, the United States, India, and Pakistan—only Thailand and Pakistan are projected to harvest larger crops. Thailand—the world’s largest rice-exporting country—is projected to increase production 5 percent to a near-record 17.8 million tons due to recovery from severe drought in 2004/05. Pakistan is expected to increase production 2 percent to a near-record 5 million tons. Pakistan exports more than 40 percent of its crop annually. Several smaller exporters are projected to increase production in 2005/06 as well. Egypt is projected to harvest another record crop, projected at nearly 4.2 million tons. Burma is projected to recover from the regional drought and increase production 8 percent to 10.4 million tons. Australia—which suffered three consecutive years of drought—is projected to more than double production to 465,000 tons in 2005/06. The bulk of Australia’s crop is exported. Other exporters are projected to harvest smaller crops in 2005/06. An erratic monsoon is responsible for a fractional drop in India’s production to 85 million tons. Typhoon damage late last summer is expected to reduce Vietnam’s crop fractionally from the year-earlier record to 22.5 million tons. Weather problems in several major producing areas reduced the U.S. crop 5 percent from the 2004/05 record to 7 million tons, still the second highest on record. Among the smaller exporters, Argentina and Uruguay are projected to harvest slightly smaller crops in 2005/06. All five of the top Asian rice-importing countries—Indonesia, Bangladesh, the Philippines, Japan, and Malaysia—are projected to increase production in 2005/06, with record rice crops forecast for the Philippines and Bangladesh. Indonesia’s production is projected to increase 2 percent to 34.9 million tons, just fractionally below the 2003/04 record. Since the late 1990s, Indonesia’s rice production has been relatively stable, a major factor behind its reduced import levels in recent years. Despite excessive rainfall early in the season, Bangladesh is projected to harvest a record 26.7-million-ton crop in 2005/06. Bangladesh has successfully expanded production since 1999. Expanded plantings and a record yield are responsible for a third consecutive record crop— projected at 9.5 million tons—for the Philippines in 2005/06. Greater use of hybrid seed has supported higher yields in the Philippines. Japan’s 2005/06 crop is projected to increase almost 1 percent to 8 million tons despite smaller area. Better weather is expected to raise Malaysia’s crop 2 percent to 1.45 million tons. Malaysia is the only major Asian rice-importing country that relies on imports for a substantial share of consumption. Among the smaller Asian rice importers, Sri Lanka is projected to produce a record 2.24-million-ton crop in 2005/06, a result of a big boost in average yields and slightly larger plantings. Larger plantings are projected to raise Taiwan’s production slightly. Rice production is projected to decline in most other Asian-importing countries. South Korea is projected to reduce rice production 5 percent in 2005/06 to 4.75 million tons. South Korea has recently changed its rice policy in the face of declining per capita consumption and expectations of increased annual WTO imports. Rice production is projected to continue to decline in Nepal due to deteriorating infrastructure and some weather problems. For major non-Asian importers, record crops are projected for a second consecutive year for both Nigeria and Iran. In fact, Sub-Saharan Africa (including Nigeria)—currently the world’s largest rice import market—is projected to harvest a record 8.5-million-ton crop, almost 9-percent above a year earlier. Nigeria’s is the largest rice-producing country in Sub-Saharan Africa. Iran is projected to harvest its third consecutive record crop. In contrast, Brazil’s 2005/06 production is projected to drop 13 percent from the year-earlier record to 7.8 million tons due to smaller plantings caused by low prices. EU-25 rice production is projected to decline nearly 7 percent from the year-earlier record to 1.74 million tons, a result of reduced plantings and severe heat and drought in some areas. Global Ending Stocks Are Projected To Decline for a Fifth Consecutive Year World rice consumption—including a residual component that represents unaccounted losses and any statistical errors—is projected at 414.2 million tons in 2005/06, about 1 million tons below a year earlier and nearly 1.4 million tons below the 2003/04 record. India accounts for most of the projected consumption decrease in 2005/06. India’s consumption forecast includes a substantial residual term. The residual term is impossible to estimate for India or any other country. In addition to India, rice consumption is projected to slightly decline in 2005/06 in Japan and South Korea—a long-term trend in both countries, a result of income-driven diet diversification. In contrast, record levels of consumption—including the residual—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 2005/06 as well. With consumption exceeding production in 2005/06 by 8.1 million tons, global rice ending stocks are projected to drop 11 percent to 64.6 million tons. This is the fifth consecutive year of declining global ending stocks and the lowest ending stocks since 1982/83. The global stocks-to-use ratio is projected at 15.6 percent, down from 17.5 percent a year earlier and the smallest since 1974/75. 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 2005/06 as well. Brazil’s stocks are projected to decline 53 percent to 0.73 million tons—a result of a much smaller crop. Brazil’s stocks were abnormally high in both 2003/04 and 2004/05. Vietnam is projected to reduce stocks 8 percent due to record exports in 2005 and a slightly smaller crop. U.S. stocks are projected to drop 31 percent due to a smaller crop and record total use. In contrast, ending stocks are projected to increase in 2005/06 in India, South Korea, Pakistan, the Philippines, and Thailand. World trade is projected at 25.5 million tons in calendar year 2006, an 8- percent drop from a year earlier and more than 8 percent smaller than the 2002 record of 27.8 million tons. A decline in imports by several major buyers— primarily the Philippines, Sub-Saharan Africa, Bangladesh, Saudi Arabia, and Indonesia—is the major factor pulling global rice trade down in 2006. These reductions are partially offset by increased imports by Brazil, Iraq, and South Korea. On the export side, weaker shipments from India, Vietnam, Pakistan, China, and Egypt are projected to more than offset stronger shipments from Thailand, Argentina, Australia, and Uruguay. In 2005, global rice trade is projected to increase 2 percent to 27.7 million tons, just fractionally below the 2002 record. Expanded shipments from India, the United States, Pakistan, Egypt, and Argentina are projected to more than offset a 2.9-million-ton drop in Thailand’s exports and weaker shipments from China and Uruguay. Among the major importers, larger imports in 2005 by the Philippines, Sub-Saharan Africa, Indonesia, Nigeria, Cuba, Iraq, and Turkey are projected to more than offset reduced imports by China, Brazil, Saudi Arabia, Sri Lanka, and the United States. International Trading Prices Are Up 8 Percent From a Year Earlier As of mid-November 2005, global trading prices were up about 8 percent from a year earlier, a result of tighter global supplies in 2005/06. In mid- November, Thailand’s 100 percent grade B (FOB vessel, Bangkok) was quoted at $283 per ton, up $23 from a year earlier. Prices had exceeded $300 per ton last spring, as Thailand was holding substantial amounts of its 2004/05 main- season crop off the market. Prices began to drop by late spring due to a record winter-spring harvest in Vietnam and lack of demand for Thailand’s rice due to more competitive prices from Vietnam. Thailand’s prices dropped further in October in anticipation of a record main-season harvest to begin this month. Prices have continued to decline through mid-November. To date, Thailand’s 2005/06 intervention purchases of rough have been too small to have any noticeable impact on trading prices, despite this year’s announced higher intervention prices. The Government of Thailand has announced it will purchase up to 9 million tons of its main-season (or monsoon) crop and will provide a similar intervention program for its much smaller second season (dry season). Thailand’s quoted prices for its 100 percent grade B milled rice averaged $278 per ton in 2004/05, up from just $220 in 2003/04. In 2004/05, Thailand’s total rice production declined nearly 6 percent. The weaker crop, plus the intervention purchases, were main factors behind the higher prices in 2004/05. Thailand’s export prices from late 2000 through 2003 were the lowest since the early 1970s. Thailand is currently not competitive in the global rice market. Pakistan is quoting prices well below Thailand for similar grades of rice. Vietnam is not making any additional sales at this time, and India is currently selling mostly parboiled and basmati rice. Vietnam has halted quoting rice prices since mid-October, a result of tight supplies until its winter-spring harvest in February and March and record sales already on the books. Price quotes for Vietnam’s 5 percent brokens (FOB Ho Chi Minh City) were reported at $268 per ton for the week ending October 18, up $38 from July. Vietnam is projected to export a record 5 million tons of rice in 2005, a result of competitive prices and a record 2004/05 crop. Vietnam has supplied several markets formerly supplied by Thailand due to more competitive prices and ample supplies. India is quoting mostly export prices for its parboiled rice and basmati. Pakistan is more competitive than India in the low-quality 25-percent brokens market. Harvest of India’s main-season kharif crop is nearly over. Similar to Thailand’s intervention purchase program for rough rice, the Government of India purchases milled rice to support prices. The U.S. export price situation varies somewhat by class of rice. Prices for U.S. long grain milled rice—No. 2, 4-percent brokens, (FAS vessel, U.S. Gulf port)—have increased 11 percent since early August. The stronger prices are the result of much higher fuel prices, some supply disruptions caused by Hurricanes Katrina and Rita, and a reluctance of U.S. producers to sell early in the season. In mid-November, the U.S. price was quoted at $309 per ton, up from $278 at the start of the 2005/06 market year. Prices are still about 1 percent below a year earlier. After increasing the U.S. “free alongside vessel (FAS)” price to reflect a “free on board vessel (FOB)” price, the U.S. price difference over comparable grades of Thailand’s rice was $41 per ton in mid-November, up from about $10 in August but well below $90 a ton a year earlier. The U.S. price difference will likely narrow over the remainder of the 2005/06 market year. The United States just harvested a record long grain crop, and long grain exports are projected to be the second highest on record in 2005/06. Price quotes for U.S. California milled rice have increased sharply since last spring in response to expectations of a much smaller 2005/06 California harvest, a big drop in U.S. medium grain supplies in 2005/06, and a record pace of exports in 2004/05. In mid-November 2005, export prices for No. 1, 4- percent brokens California medium grain milled rice (sacked, FOB vessel, Oakland) were quoted at $515 per ton, up from $330 in late May. Prices were quoted at $475 in late September, just prior to the onset of the 2005/06 California harvest. The mid-November prices reflect recent large sales to Japan, the highest-priced market for U.S. rice. India, Vietnam, & Pakistan Are Projected To Export Less Rice in 2006 Global rice trade in 2006 is projected to decline 8 percent from the year- earlier near-record, the result of a big drop in imports by several large Asian buyers. Among the top five rice exporters—Thailand, Vietnam, India, the United States, and Pakistan—only Thailand is projected to increase shipments in 2006. U.S. exports are projected to remain at the 2005 near-record level. Among the medium-sized exporters, Egypt and China are projected to export less rice in 2006, while Argentina, Australia, and Uruguay are projected to expand shipments. Several top global rice-importing countries and regions—primarily Sub-Saharan Africa, the Philippines, Saudi Arabia, Indonesia, Bangladesh, and Cuba—are projected to import less rice in 2006. Global rice trade in 2005 is projected at a near-record 27.7 million tons, 2 percent above a year earlier. Record exports in 2005 from Vietnam and Egypt, plus stronger shipments from India, Pakistan, the United States, and Argentina are projected to more than offset a big decline in exports from Thailand and smaller shipments from China and Uruguay. Sub-Saharan Africa and the Philippines account for most of the projected increase in global rice imports in 2005. Major Exporters Thailand: Thailand is the world's largest rice-exporting country and has accounted for about 28 percent of global rice exports over the past decade. In 2006, Thailand is projected to ship 7.5 million tons (milled basis) of rice, up 250,000 tons from a year earlier but well below the 2004 record of 10.1 million tons. A 5-percent increase in Thailand’s production in 2005/06 and tighter supplies in both Vietnam and India are the main factors behind the slightly stronger export forecast for Thailand in 2006. At just 7.25 million tons, Thailand’s shipments in 2005 are nearly 29 percent below the year-earlier record and the smallest since 2002. A severe drought cut Thailand’s 2004/05 crop almost 6 percent from the year-earlier record. Thailand's 2005/06 rice production is projected at a near-record 17.8 million tons (milled basis), up almost 5 percent from the drought-reduced 2004/05 crop. The larger crop is primarily due to expanded plantings. Harvested area is forecast at 10.17 million hectares, up 350,000 hectares from a year earlier and second only to the 2003/04 record of 10.3 million hectares. The average yield, the highest on record, is up fractionally from a year earlier. Thailand’s 2003/04 production of 18 million tons (milled basis) was the largest on record. Thailand’s yields are low compared with most other major rice-producing countries in Southeast Asia—especially compared with Vietnam, Indonesia, the Philippines, and Malaysia. 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 EU-25, parts of the Middle East, and a few West African markets. Thailand competes with Vietnam in various intermediate- quality long grain markets, mostly in Southeast Asia, the Middle East, and parts of Sub-Saharan Africa (mostly West Africa). Thailand also competes with India and the United States in major parboiled markets in 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 around 2 million tons of its premium jasmine rice each year, with the United States, Hong Kong, Singapore, Senegal, and China major buyers. More than 20 percent of Thailand’s total rice production is jasmine rice, mostly grown in the rainfed Northeast. Thailand also exports small quantities of glutinous rice, mostly to Asian markets. Glutinous rice accounts for just 2-3 percent of global rice trade, but accounts for about 20 percent of Thailand’s total rice production. Average field yields in Thailand are typically lower for both jasmine rice and glutinous rice than for non-specialty rice. Vietnam: Vietnam is typically the world's second-largest rice exporter and is projected to export 4.5 million tons in 2006, down from a record 5 million in 2005. The weaker export forecast for 2006 is primarily due to tighter supplies. Vietnam is projected to produce 22.5 million tons of rice in 2005/06, fractionally below the year-earlier record, the result of slightly smaller area caused by typhoon damage last summer. Despite severe drought in parts of peninsular Southeast Asia and abnormal dryness in some parts of Vietnam (mostly non-rice growing areas), the 2004/05 crop of 22.63 million tons was the largest on record. All of Vietnam’s rice exports are long grain, mostly intermediate and low quality, mostly shipped to Southeast Asia, Sub- Saharan 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 September-November in the North. 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 . 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 almost 30 percent of annual production and is harvested July-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. Most of Vietnam’s rice is grown under irrigated conditions, a major factor behind its stronger yield performance than Thailand. United States: The United States is projected to export a near-record 3.8 million tons of rice in 2006, unchanged from a year earlier and just fractionally below the 2003 record. Record supplies in 2005/06 and expectations of a smaller price difference over major Asian competitors for similar grades of rice are behind the forecast for continued strong U.S. exports in 2006. The U.S. share of world trade in 2006 is projected at 14.9 percent, up from 13.6 percent in 2004 and 2005. The U.S. share of world rice trade has 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 since the mid-1970s. Since 2003, the U.S. share of global rice exports has increased a little, mostly due to larger shipments from the United States and—since 2004—weaker exports from China. Southern long grain typically accounts for 75-80 percent of U.S. rice exports, with Mexico, Central America, the Caribbean, the EU-25, West Africa, Saudi Arabia, and Canada accounting for most of the shipments. In addition, Brazil typically buys substantial amounts of U.S. long grain rice when regional supplies are inadequate. The United States also exports smaller quantities of medium/short grain rice, mostly to Japan, Turkey, South Korea, Taiwan, and Jordan. U.S. exports to Northeast Asia are part of each importer’s WTO commitments. Since 2004/05, the United States has sold medium/short grain rice to several countries in Oceania—primarily Papua New Guinea, Micronesia, British Polynesia, and Western Samoa, a result of very tight supplies in Australia, typically the major supplier to these small markets. California supplies most of U.S. medium/short grain exports. India: For 2006, India is projected to export 3.5 million tons of rice, down 22 percent from a year earlier and well below the 2002 record of 6.65 million. The projected export contraction for 2006 is based on tighter supplies—a result of only modest harvests in 2004/05 and 2005/06. India’s ending stocks have dropped sharply since 2001/02 and are projected at 9 million tons in 2005/06, about equal to the government’s announced minimum-security level. India’s export levels often depend on the government’s willingness to subsidize non-specialty rice exports. Without subsidizes, India is typically limited to exporting only high-quality parboiled rice and its premium basmati. India’s internal rice prices are typically higher than global trading prices. High internal transportation costs are a major factor for India’s lack of competitiveness. India exports a premium-priced basmati rice to higher income countries, high- quality parboiled rice to middle income countries, and low-quality non-aromatic long grain rice to developing countries. Principal markets for India’s basmati rice are the Middle East, the EU-25, and the United States. Sub-Saharan Africa and South Asia are the major export markets for India's lower-quality coarse rice. South Africa, Nigeria, and the Middle East are the top markets for India’s high-quality parboiled rice. Pakistan: Pakistan is projected to export 2.1 million tons of rice in 2006, down 11 percent from 2005 but still the third highest on record. The 2005 export forecast of 2.35 million tons is up 18 percent from a year earlier and second only to the 2001 record of 2.4 million tons. The strong export forecasts for 2005 and 2006 are based on a near-record crop of 5 million tons in 2005/06 and adequate supplies in both years. Pakistan’s exports dropped sharply in 2002 and remained constrained in 2003 and 2004 due to three consecutive years—2000/01-2002/03—of severe drought that sharply reduced production and supplies. Both production and exports have since rebounded. In 2005/06 Pakistan is projected to produce 5 million tons of rice, up almost 2 percent from a year earlier and the second highest on record, a result of a stronger yield. Production remains below the 1999/2000 record of nearly 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 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, East Africa, Afghanistan, Bangladesh, Indonesia, the Middle East, and the EU-25 are leading export markets for Pakistan. Other Exporters Australia: Australia's rice exports in 2006 are projected to increase 40 percent to 175,000 tons, still well below the 1999 record of 667,000 tons. Even with the projected increase, Australia’s exports are still well below levels reported from 1999 to 2001, a result of very weak crops from 2002/03- 2004/05. Extremely tight water supplies—which caused rice plantings to plummet—is the main factor accounting for the much smaller Australian rice crops. Australia’s 2005/06 rice crop is projected at 465,000 tons; up from just 218,000 tons a year earlier, a result of larger area and a much higher expected yield. The 2004/05 crop was the smallest since 1971/72. 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. Limited supplies of water for irrigation are a constraint on any significant expansion in Australia's rice production. 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 typically major export markets for Australian rice. China: China's 2006 rice exports are projected at 600,000 tons, down 150,000 tons from a year earlier and the lowest since 1996. China exported 880,000 tons of rice in 2004, a 1.7-million-ton drop from a year earlier. China’s exports have dropped sharply since 2004, a result of much tighter supplies and higher domestic prices. China’s total rice supplies have declined each year since 2000/01, and are projected to drop 5 percent in 2005/06 despite larger production. In 2006, China’s exports are projected to exactly offset imports. In 2005, China’s exports are projected to be slightly larger than imports. China was a net importer of rice in 2004, the first time since 1996. Except for 1989 and 1995-96, China had been a net exporter of rice very year since 1960, typically shipping 1-3 million tons a year from 1965-2003. China is not expected to be a major importer or exporter in the near term. 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 since 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 (long grain) crop on the same land in the South, with the early crop often having quality problems. China also harvests a single japonica (medium/short grain) 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. More than half of China’s rice area is planted with high-yielding hybrid rice varieties. Egypt: Egypt is projected to export a near-record 1 million tons of rice in 2006, down 100,000 tons from the year-earlier record. Virtually all of Egypt’s rice exports are high-quality medium/short grain, with the eastern Mediterranean and parts of Europe the major markets. 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 2005/06 rice production is projected at a record 4.2 million tons, up almost 2 percent from a year earlier, a result of slightly larger plantings and a record yield. Egypt has harvested consecutive record crops since 2003/04. Egypt’s yields are the highest in the world, a result of climate, varieties grown, and management practices. Egypt’s rice growers receive substantial production subsidies from the government, especially for irrigation water, which is essentially provided by the government. Uruguay: Uruguay is the largest rice exporter in South America, exporting most of its crop, with Brazil the primary market. Long grain accounts for most of Uruguay’s production and exports. In 2006, Uruguay is projected to export 700,000 tons of rice, up 50,000 tons from a year earlier but below the 2001 record of 806,000 tons. In 2005, Uruguay’s exports are projected to drop 19 percent to 650,000 tons, the lowest since 2002. Weaker imports by Brazil—the largest market for Uruguay’s rice—is the main factor behind the smaller shipments from Uruguay in 2005. To offset the weaker demand from Brazil in 2005, Uruguay is shipping rice to both Iran and Senegal. This is the first year Uruguay has shipped rice, mostly brokens, to Senegal. Iran has been a market for Uruguay since 2003. 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. In 2005/06, Uruguay’s rice production is projected at 823,000 tons, down 3 percent from a year earlier, a result of a weaker yield. Area is actually projected to increase slightly in 2005/06. The 2004/05 crop of 850,000 tons was 4 percent below a year earlier, a result of smaller plantings and a weaker yield. Rice production in Uruguay remains almost 10 percent below the 1998/99 record of 910,000 tons. Argentina: Argentina is the second-largest rice exporter in South America. Like Uruguay, Argentina grows and ships mostly long grain rice, primarily to markets within Latin America. In 2006, Argentina’s rice exports are projected at 400,000 tons, up 50,000 tons from a year earlier but well below the 1999 record of 674,000 tons. The higher 2006 export forecast is based on another year of large supplies in 2005/06. Brazil is typically 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 or regional demand weak. Argentina has recently started shipping rice to Senegal, partly in response to weaker purchases by Brazil. Argentina’s 2005/06 rice crop—to be harvested in April-May 2006—is forecast at 660,000 tons, down more than 3 percent from a year earlier, a result of slightly smaller plantings and a weaker yield. At 160,000 hectares, rice area in 2005/06 is 5,000 hectares below a year earlier and 14,000 hectares below 2003/04 area. Low prices and declining demand from Brazil are the major factors behind the weaker rice plantings in Argentina since 2004/05. The European Union (EU-25): Although a net importer of rice, the EU-25 regularly exports rice to non-EU-25 countries. In 2006, the EU-25 is projected to export 175,000 tons, unchanged from a year earlier. Exports in 2005 and 2006 are projected to be the lowest since 1995. Italy accounts for nearly all of the EU-25 rice exports outside the region. The EU-25 exports medium/short grain rice, mostly to countries along the Mediterranean. The EU-25 ships smaller amounts of rice—mostly as food aid—to Central Asia, the Caucuses, the Balkans, and Sub-Saharan Africa. The United States purchases small amounts of Italian Arborio rice each year. The EU-25 is a high-cost rice producer and relies on subsidies to ship most of its commercial exports. EU-25 export subsidies are limited by the WTO. Internal rice prices in the EU-25 are substantially above global trading prices. The EU-25 domestic market is currently protected from imports by high tariffs. EU-25 production in 2005/06 is projected at 1.74 million tons, down nearly 7 percent from the year-earlier record, a result of smaller area. At 412,000 hectares, area is down 14,000 hectares from 2004/05 and below the 1996/97 record of 431,000 hectares. Despite severe drought in Spain and Portugal this summer, the EU-25 average yield is up slightly from a year earlier. The 2004/05 crop of 1.86 million tons was the largest on record and 8 percent above a year earlier. Larger plantings more than offset a slightly weaker yield in 2004/05. The majority of the EU-25’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-25 rice production. Greece, France, and Portugal account for most of the remainder. Burma: In 2006 Burma is projected to export 150,000 tons of rice, unchanged from a year earlier but up 20,000 tons from 2004. In February 2004, Burma placed a ban on new exports of rice that basically remains in effect. In June 2004 the government announced it would allow some exports from certain designated “enterprise” zones if licenses were obtained. Burma exported 388,000 tons of rice in 2003. Trade is strictly controlled by the Government of Burma. 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 2005/06 rice crop is projected at 10.44 million tons, up 9 percent from a year earlier but still more than 3 percent below the 2002/03 record. Larger plantings and a slightly higher yield are behind the stronger 2005/06 production forecast. Area dropped 5 percent in 2004/05 due to damages from floods and farmers’ reluctance to plant the second dry-season crop due to depressed prices caused by the import ban. 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 very small quantities of high-quality long grain rice. Burma exports mostly to low-income countries. Global Rice Imports Are Projected To Decline 8 Percent in 2006 Global rice imports are projected to decline 8 percent in 2006 to 25.5 million tons. Trade would be the smallest since 2001 and more than 8 percent below the 2002 record of 27.8 million tons. The weaker import projection for 2006 is based on smaller purchases by several top import markets, primarily Sub-Saharan Africa, the Philippines, Bangladesh, Indonesia, and Saudi Arabia. The decline in imports by Asia and Sub-Saharan Africa is due to bumper crops and large supplies in both regions. In contrast, South American imports are projected to increase in 2006, mostly due to greater purchases by Brazil. Trade in 2005 is forecast at 25.7 million tons, up 2 percent from a year earlier and the second highest on record. In 2005, larger imports by Sub-Saharan Africa, the Philippines, Indonesia, the Philippines, Cuba, Iraq, and Turkey more than offset weaker imports by China, Brazil, Saudi Arabia, South Africa, Sri Lanka, and the United States. Major Import Regions Asia In 2006, Asia is projected to import 6.5 million tons of rice, down 14 percent from 2005 and the lowest since 2001. Bumper crops in major-importing countries—especially Indonesia, Bangladesh, the Philippines, and Malaysia—are 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 imports increased from 2001-2003, but declined in 2004. Imports increased slightly in 2005. Asia is typically the world’s largest import market for rice. However, in 2006 Sub-Saharan Africa’s imports are projected to exceed Asia’s, the first time since 2001. Southeast Asia Rice Imports Are Projected To Drop 27 Percent in 2006 Southeast Asia is the largest import market for rice in Asia. Total rice imports by the region are projected to decline 1.1 million tons to 3 million, the lowest since 1997. A virtual record crop in 2005/06 and larger supplies are behind the weak import forecast for 2006. The Philippines and Indonesia are the two largest importers in Southeast Asia. Thailand and Vietnam supply most of Southeast Asia’s rice imports. The Philippines: The Philippines is projected to import 1.1 million tons of rice in 2006, down 800,000 tons from 2005. The weaker import forecast for 2006 is the result of record supplies. The large supplies are the result of five consecutive record crops and near-record imports in 2005. Imports in 2005 of 1.9 million tons are second only to the record 2.2 million tons imported in 1998 after severe El Nino damage to the 1997/98 crop. The Philippines is projected to produce a record 9.5-million-ton rice crop in 2005/06, up fractionally from a year earlier and the fifth consecutive record crop. The 2005/06 production increase is primarily due to larger area. The yield, the highest on record, is virtually unchanged from a year earlier. At 4.12 million hectares, plantings in 2005/06 are up 15,000 hectares from a year earlier and are the highest on record. Yields have climbed to record-highs each year since 2003/04. Yields are up 18 percent since 1999/2000 after being nearly stagnant the previous decade. The Government of the Philippines is making efforts to boost yields, including promoting and subsidizing the use of high-yielding hybrid seeds. Despite a bumper crop, consumption—projected at a record 10.6 million tons—is expected to exceed milled rice production by 1.1 million tons in 2005/06. This is the 15th consecutive year that consumption has exceeded production. Lack of resources to significantly expand rice growing area and develop infrastructure, plus a steadily increasing population, indicate the Philippines will be a regular importer of rice for the foreseeable future. Indonesia: Indonesia is projected to import 700,000 tons of rice in 2006, down 200,000 tons from a year earlier and well below imports in 2002 and 2003. Bumper crops from 2003/04-2005/06 and large domestic supplies are behind the decline in imports since 2004. In addition, in 2004 Indonesia placed a ban on imports to protect its farmers from lower-priced imported rice. The government originally imposed a rice import ban from January 2004 to July 2004. That ban was extended in August until the end of 2004. In December 2004, the government extended the ban to June 2005 and that month re-extended it to the end of 2005 until the government decided in September that imports were needed to stabilize local rice prices. The ban prohibited imports of rice varieties grown in Indonesia. Specialty rices not grown in Indonesia were not prohibited. Indonesia’s 2004 imports of 650,000 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 2005/06 crop is projected at 34.9 million tons, up less than 2 percent from a year earlier, but still fractionally below the 2003/04 record of 35 million tons. At 11.7 million hectares, area is up 50,000 hectares from a year earlier but 200,000 hectares below 2003/04 and 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. About half of Indonesia’s rice production is grown on Java. Yields are much lower on the other islands. The average yield in 2005/06 is 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. Malaysia: Malaysia is projected to import 600,000 tons of rice in 2006, down 50,000 tons from a year ago and 100,000 tons below the 2004 record. A near- record crop in 2005/06 and large supplies are behind the weaker import forecast. At 1.45 million tons, Malaysia’s 2005/06 rice production is up 2 percent from the year-earlier record, a result of slightly larger plantings and a higher yield. At 677,000 hectares, rice plantings in Malaysia in 2004/05 are fractionally above a year earlier and the highest since 1981/82. 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 1972/73 and 1975/76 records of 750,000 hectares. Yield growth has been quite slow—especially 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. South Asia Is Projected To Reduce Rice Imports 26 Percent in 2005/06 South Asia is the smallest rice-importing region in Asia. In 2005/06, South Asia is projected to reduce imports 300,000 tons to 865,000 tons, the smallest since 2002. Bangladesh is the largest importer in the region. Afghanistan and Sri Lanka account for most of the additional imports. India and Pakistan supply most of South Asia’s rice imports. Bangladesh: In 2006, Bangladesh is projected to import 500,000 tons of rice, down 300,000 tons from a year earlier and less than half the amount imported in 2003. Record supplies and a record 2005/06 crop are behind the weaker import forecast for 2006. The 2005/06 record crop of 26.7 million tons is up 3 percent from a year earlier, the result of record plantings and a record yield. At 11.1 million hectares, area is up 1 percent from a year earlier and the third consecutive year of record plantings. Despite severe flooding in the summer and fall of 2004, rice production of 25.5 million tons in 2004/05 was down just 2 percent from a year earlier. Despite the record area reported in 2005/06, rice plantings in Bangladesh are up only about 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 increased only fractionally since 2000/01. Despite its success in increasing rice production nearly 35 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 rice is not available. Afghanistan: Afghanistan is projected to import a near-record 250,000 tons of rice in 2006, unchanged from a year earlier but up 50,000 tons from 2004. The strong import forecasts are based on higher consumption. Production in 2004/05 and 2005/06 is projected at 300,000 tons, the largest since 1998/99. Afghanistan produced larger crops during most of the 1980s and was virtually self-sufficient in rice. Severe political turmoil and war have been major factors limiting Afghanistan’s rice production for the past 15 years. Pakistan supplies most of Afghanistan’s rice imports. Sri Lanka: In 2006 Sri Lanka is projected to import 100,000 tons of rice, unchanged from a year earlier but less than half the level imported in 2004. The 2005/06 projected crop of 2.24 million tons is up 14 percent from a year earlier and the largest on record, a result of slightly larger plantings and a much higher yield. The 2004/05 crop was limited by drought. The government is promoting greater rice production by improving the irrigation system, bringing back abandoned land under cultivation, and supplying quality inputs and subsidized fertilizers to farmers. India supplies the bulk of Sri Lanka’s rice imports. East Asia Is Projected To Increase Rice Imports 15 Percent in 2005/06 East Asia is projected to import 2.67 million tons of rice in 2006, up 15 percent from a year earlier. The bulk of the region’s imports are purchased under WTO agreements by Japan, South Korea, and Taiwan. China and Hong Kong account for almost all non-WTO imports. East Asia’s production is projected at 142.8 million tons in 2005/06, up more than 1 percent from a year earlier. Except for Hong Kong, which does not grow rice, East Asia is nearly self- sufficient in rice. The region has some of the highest production costs in the world, especially in Japan and South Korea. Per capita rice consumption is declining in the region, especially in Japan, Taiwan, and South Korea. China: In 2006, China is forecast to import 600,000 tons of rice, up 100,000 tons from a year earlier but well below the 1.1 million tons imported 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 2006, more than half of China’s imports are projected to be jasmine 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 nearly 7 percent in 2004/05 and production rose more than 11 percent to 125.4 million tons. For 2005/06, area is projected at 29 million hectares, an increase of 2 percent from a year earlier. The 2005/06 crop of 127.4 million tons is nearly 2-percent larger than a year earlier. Despite the recent increases, China’s rice production still remains more than 9 percent below the 1997/98 record of 140.5 million tons. China is the largest rice-consuming country in the world. Except for 1989, 1995, 1996, and 2004, China has been a major net-exporter of rice since the mid-1960s. 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, mainly 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. Japan is projected to harvest an 8-million-ton rice crop in 2005/06, up less than 1 percent from a year earlier, a result of a higher yield. Area is down fractionally. In 2004/05 Japan’s rice production of 7.94 million tons was up 12 percent from a year earlier, a result of a much higher yield and slightly larger plantings. 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. 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 increased from 57,000 tons (milled basis) in 1995/96 to 204,000 tons in 2004/05. In late 2004, South Korea announced it would agree to nearly double its annual import requirements by 2014 in return for a 10-year delay in moving to tariffication of its rice market. The Government of South Korea has yet to ratify its new WTO commitment. As such, no imports have been purchased for 2005/06. It is expected that South Korea will ratify its new commitment and that these purchases will be made and shipped in early 2006. South Korea’s rice imports are projected at just 120,000 tons in 2005, down 36 percent from a year earlier. The reduction is due to the delay in 2005/06 purchases caused by the delay in ratifying the new WTO commitments. For 2006, South Korea is projected to import 475,000 tons. Like Japan, South Korea is not projected to import above its WTO commitment. South Korea’s 2005/06 rice crop is projected at 4.75 million tons, a 5-percent drop from a year earlier, a result of both smaller plantings and a weaker yield. In 2005, South Korea changed its rice policy by providing a public reserve system and eliminating the state purchase system. The new policy is designed to adjust rice area in the face of declining per capita consumption and increasing WTO imports. 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 2006, down from 600,000 a year earlier. The 2005/06 rice crop is projected at 1.6 million tons, a 4-percent increase from a year earlier and the largest since 1999/2000. Rice production has not exceeded 1.6 million tons since 1990/91. North Korea grew 25-33 percent more rice annually during the 1980s than so far this century. Both area and yield are well below levels reported in the 1980s. Food aid accounts for all of North Korea’s rice imports. Most of the food aid is purchased from Thailand and Vietnam by South Korea. Since 2004, South Korea has donated some of its own rice to North Korea. Taiwan: As a requirement for joining the WTO in 2001, Taiwan agreed to import 144,720 tons (brown rice basis) in 2002 as part of a minimum access requirement. In 2003, Taiwan switched its WTO commitment from a minimum market access requirement to a tariff-rate quota. Because Taiwan agreed to tariffication, the in-quota amount remains fixed at the 2003 level. For calendar year 2006, Taiwan is projected to import 125,000 tons (milled basis), unchanged from 2005. The United States has supplied two-thirds of Taiwan’s rice imports since 2002. Taiwan is essentially self-sufficient in rice. Tariff rates on over-quota rice are restrictively high. Producer prices on Taiwan are typically 4-5 times higher than prices in the international market for similar grades of rice. Most of the rice grown on Taiwan is medium/short grain. Nearly all table rice consumed is medium/short grain. In 2005/06 Taiwan is projected to produce 1.03 million tons of rice, up 1 percent from a year earlier, a result of expanded plantings. Like Japan, Taiwan has experienced declining per capita rice consumption for decades, a result of higher incomes. For more than two decades, authorities on Taiwan have encouraged producers to shift land away from rice to alternative crops. The Middle East Rice imports in 2006 by the Middle East are projected at 4.33 million tons, down 4 percent from the year-earlier near-record. Production is projected at 2.6 million tons in 2005/06, unchanged from the year-earlier record. Iran accounts for the bulk of the rice produced in the Middle East; Turkey and Iraq account for most of the remainder. 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 import 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 2006 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 have been rather stable since 2002. Historically, Iran’s rice imports had showed sharp year-to-year fluctuations. Since 2002/03, Iran has harvested a record crop each year, a major factor behind the nearly stable imports in the face of rising consumption. Thailand and India currently supply most of Iran’s rice imports. Iran buys mostly high-quality long grain rice. In 2005/06, Iran’s crop is projected at 2.2 million tons, unchanged from the year-earlier record. The back-to-back record crops are due to expanded plantings. Rice area in both 2004/05 and 2005/06 is estimated at 630,000 hectares, the highest on record. The yield remains 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 1.2 million tons of rice in 2005, up 200,000 tons from a year earlier and second only to the 1.27 million tons imported in 2000. 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 began making commercial purchases of rice again, mostly from Thailand and Vietnam. In 2005 the United States emerged as a major supplier. Iraq’s 2005/06 crop is projected at 67,000 tons, unchanged from a year earlier but double 2003/04 production. Rice area and production dropped sharply in 2000/01 due to severe drought and did not significantly increase until 2003/04. Despite the recent increase, area and production in Iraq are substantially below levels reported in the early and mid-1990s. Imports currently account for most of the rice consumed in Iraq. Saudi Arabia: In 2006 Saudi Arabia is projected to import 1 million tons of rice, down from 1.25 million tons a year earlier and the record 1.5 million tons in 2004. The declines are due to a major build up in supplies since 2004/05. 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 175,000 tons in 2006, down 75,000 from a year earlier but slightly above 2004 imports. In September 2003 Turkey placed a ban on new purchases of foreign rice. In late 2004, Turkey substituted a quota system for an outright import ban, a major factor behind an almost 100,000-ton increase in imports in 2005. Turkey continues to restrict imports through its “domestic absorption” quota system and cumbersome licensing requirements. Turkey is restricting imports to protect its producers from three consecutive record crops that boosted its rice supplies and depressed prices. At 325,000 tons, Turkey’s 2005/06 rice production is unchanged from the year- earlier record. In 2004/05 production jumped 24 percent, a result of larger plantings and a record yield. Turkey is typically the second largest global import market for medium/short rice—after Japan—with the United States, Egypt, Australia, and the EU-25 typically 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 6.7 million tons in 2006, down 10 percent from the year-earlier record. Record production and record total supplies in 2005/06 are behind the weaker import forecast for 2006. At a record 8.53 million tons, rice production in Sub-Saharan Africa is almost 9 percent above a year earlier. With the exception of the Republic of South Africa and Nigeria, most of Sub- Saharan Africa is a low-quality rice import market. Nigeria: Nigeria is the largest rice importer in Sub-Saharan Africa and one of the largest global rice importers. Nigeria’s 2006 rice imports are projected at 1.5 million tons, down 100,000 tons from a year earlier, a result of a record crop and larger supplies. Imports remain well below the record 1.9 million imported in 2001 and 2002. A steady increase in production accounts for Nigeria’s smaller rice imports after 2002. Nigeria’s production in 2005/06 is projected at a record 2.7 million tons, up 400,000 from a year earlier. Both area and yield are the highest on record. At 2 million hectares, rice area is up 8 percent from a year earlier. The 2005/06 crop is the eighth consecutive record (or tied for record) crop for Nigeria. The Government of Nigeria is encouraging farmers to expand rice plantings and is 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. Since 2001 India has been shipping a lot of parboiled rice to Nigeria, all at a very high subsidy. South Africa: The Republic of South Africa is projected to import 750,000 tons of rice in 2006, unchanged from a year earlier but below the record 818,000 tons imported in 2004. Total supplies in South Africa have increased sharply since 2003/04. Even with the weaker imports in 2005, supplies are projected to be the highest on record in 2005/06. India and Thailand supply most of South Africa’s rice imports, mostly high-quality parboiled. The United States supplies only a very small amount of rice to South Africa. The United States was once the largest supplier of rice to South Africa. Other Sub-Saharan Africa: Senegal is a major market for brokens and a major importer of rice in Sub-Saharan Africa. In 2006, Senegal is projected to import 750,000 tons of rice, down from the record 1.1 million imported in 2005. 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 750,000 tons of rice in 2006, down 50,000 from the year-earlier record. Consumption growth outstrips production in Cote d’Ivoire. Production remains well below the 2001/02 record level, and area is 26 percent below the record 680,000 hectares harvested in 1996/97. The country has experienced severe political and civil turmoil for the past decade. Imports account for more than half of all rice consumed in Cote d’Ivoire. Ghana is projected to import 350,000 tons in 2006, down 50,000 from a year earlier and 75,000 tons below the 2004 record. Ghana has increased production since 2003/04 by raising yields. Guinea is projected to import 350,000 tons of rice in 2006, unchanged since 2003. Mozambique is projected to import 300,000 tons in 2006, unchanged from 2005 but 75,000 tons below the 2004 level. Madagascar, the second-largest rice producing country in Sub-Saharan Africa, is projected to import 100,000 tons in 2006, down 100,000 from a year earlier. Area and production in 2005/06 are the highest on record. Latin America Rice imports by Latin America (Mexico, the Caribbean, Central America, and South America) are projected at nearly 3.29 million tons in 2005, up 2 percent from a year earlier and the highest since 1998. The 1998 record of 3.65 million tons was largely driven by El Nino crop damage in much of South America. Total production in the region is projected to decline almost 8 percent in 2005/06 to 15.2 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 600,000 tons in 2006, up 50,000 tons from a year earlier and the highest on record. Increased consumption and stagnant production are behind the higher import forecast. Mexico has increased imports sharply over the past 15 years as production declined. Mexico is unlikely to expand production and, with continued growth in consumption, will remain a growing 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 suppliers 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 2006 the Caribbean is projected to import 1.16 million tons of rice, down 10 percent from a year earlier but still the second highest on record. Cuba accounts for nearly all of the expected decline in imports. For the region as a whole, both production and total supplies are projected to be smaller in 2005/06. Production for the region in 2005/06 is projected at 720,000 tons, down 25,000 tons from a year earlier and 17 percent below the 2002/03 record. Cuba and the Dominican Republic account for all of the 2005/06 production decline and about 90 percent of the region’s crop. Cuba is projected to import 700,000 tons of rice in 2006, down 150,000 tons from the year-earlier record. Cuba’s rice imports have increased substantially since 2004. Rice production in Cuba is projected at 377,000 tons in 2005/06, down 3 percent from a year earlier and 17 percent below the 2003/04 crop. Vietnam is a major supplier of rice to Cuba. Since 2002, the United States has supplied rice to Cuba as well. In 2006, Haiti is projected to import 300,000 tons of rice, unchanged from a year earlier but l3 percent below the 2003 record of 345,000 tons. Haiti’s imports have more than doubled since the early 1990s. Imports account for the bulk of rice consumed in Haiti. 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 60,000 tons of rice in 2006, up 15,000 tons from a year earlier, a result of a third consecutive year of declining production. The Dominican Republic imported virtually no rice in 2002 and 2003. Production problems since 2003/04 have necessitated much larger imports. The United States is a major supplier of rice to the Dominican Republic. Jamaica is projected to import 50,000 tons of rice in 2006, 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 2006, 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. Trinidad and Tobago grow very little rice. South America: In 2006 imports by South America are projected at 1.05 million tons, up 25 percent from a year earlier. Brazil accounts for nearly all of the increase. The larger imports by Brazil are primarily driven by smaller production. Rice production in South America is projected at 13.8 million tons, an 8-percent drop from the year-earlier record. Brazil—the largest producer, consumer, and importer in the region—accounts for most of the import and production decline. Brazil: Brazil is projected to import 750,000 tons of rice in 2006, up from 500,000 tons in 2005 but well below the 1998 record of nearly 1.6 million tons. Brazil's 2005/06 crop is projected at 7.8 million tons, down 13 percent from the year-earlier record of nearly 9 million tons. The smaller crop is primarily due to a big drop in plantings caused by lower prices and much higher production costs. Bumper crops in 2003/04 and 2004/05 have led to a large build up of rice stocks and lower prices. Rice consumption exceeded production from 1988/89 to 2002/03, making Brazil a major rice importer. Despite a record crop in 2004/05, consumption is estimated to have exceeded production, causing Brazil to boost imports in 2006. 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. Peru: Peru is the second-largest rice producing country in South America. Peru’s 2006 rice imports are projected at 75,000 tons, down 40,000 tons from a year earlier but more than twice the level imported in 2002 and 2003. Peru’s 2005/06 crop is projected at 1.45 million tons, up almost 4 percent from a year earlier but still below the 2002/03 record of 1.6 million tons. The 2003/04 crop was severely impacted by drought which cut the harvest 25 percent from the year-earlier record. Peru has increased its rice production sharply since the late-1990s, leading to a big decline in imports. Peru sources most of its rice imports from South America. Colombia: Colombia is the third-largest rice growing country in South America and is projected to import 50,000 tons of rice in 2006, unchanged from a year earlier. At 1.3 million tons, production is projected to drop 6 percent in 2005/06. Colombia has substantially lowered its annual imports from levels imported during most of the 1990s, a result of much larger production since the late 1990s. The production increase in the late 1990s was largely due to a big increase in area. Both rice area and production in Columbia have been rather stable since 1999/2000. Central America: The region is projected to import 480,000 tons of rice in 2006, down 55,000 tons from the year-earlier record. Costa Rica and Guatemala account for all of the projected decline in imports. Large supplies in the region are behind the weaker import forecast for 2006. At 496,000 tons, production in Central America is unchanged from a year earlier but below the record 613,000 tons harvested in 2000/01. Rice area and production are not increasing in the region. Costa Rica’s imports are projected at 100,000 tons, down 40,000 tons the year- earlier record. Rice stocks have built up substantially in Costa Rica since 2004/05. 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 increase 10,000 tons to a record 120,000 tons in 2006. Production has declined in Nicaragua since 2002/03 while consumption continues to increase. El Salvador is projected to import 75,000 tons in 2006, unchanged from a year earlier but up 50 percent from 2004. El Salvador grows very little rice and production has declined since the late 1990s. Panama is projected to import 35,000 tons of rice in 2006, unchanged from a year earlier but well above levels typically imported in recent years. Panama’s crop is projected at 141,000 tons in 2004/05 and 2005/06, about 30 percent below the 2001/02-2003/04 average, a result of severe pest infestations. Panama is typically nearly self-sufficient in rice. 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 rice 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-25: The EU-25 is projected to import 975,000 tons of rice in 2006, down 75,000 tons from a year earlier and the second consecutive year of declining imports. The reduced import levels are due to record supplies and ending stocks in 2004/05 and 2005/06. The EU-25 imports mostly long grain—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-25 rice imports. The EU-25 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-25. The EU-25 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. The former Soviet Union (FSU): The countries of the former Soviet Union are projected to import 551,000 tons of rice in 2006, up 25,000 tons from a year earlier but below the level imported in 2002. Since 2003 imports have been rather stable. Production in 2005/06 is projected at 892,000 tons, up 16 percent from a year earlier and the largest since 1994/95. Despite the increase, production remains below the 1988/89 record of 1.7 million tons. Russia is the largest market for rice in the former Soviet Union, with imports projected at 375,000 tons in 2006, up 25,000 from a year earlier. Russia’s rice production is projected at 400,000 tons in 2005/06, up 31 percent from a year earlier but still well below the record 745,000 tons produced in 1988/89. The 2005/06 production increase is the result of a big boost in yield and slightly larger area. Yields were up substantially in 2004/05 as well. Ukraine is projected to be the second largest market for rice in the former Soviet Union in 2006, with imports projected at 75,000 tons, unchanged since 2003. Rice production in Ukraine in 2005/06 is projected at 50,000 tons, nearly unchanged for the past decade but only about half the level produced in 1989/90. Uzbekistan is projected to import 25,000 tons of rice in 2006, unchanged from levels imported from 2003-2005. Imports are well below levels imported in 2001 and 2002 when rice production in Uzbekistan collapsed due to severe drought in the region. Production in 2005/06 is projected at 135,000 tons, up 17,000 tons from a year earlier, a result of expanded area. Despite the expected increase, the 2005/06 crop is about one-third below 2003/04 production. Area and production dropped more than 40 percent in 2004/05. United States: Imports by the United States are projected at 450,000 tons in 2006, up 10 percent from a year earlier. Fragrant (or aromatic) rices from Asia account for the bulk of U.S. rice imports. Thailand, India, and Pakistan supply nearly all fragrant rice imported by the United States. Imports of fragrant rice typically increase each year.