Rice YEARBOOK -- SUMMARY November 20, 2006 November 2006, ERS-RCS-2006 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The text of the yearbook will be available electronically about 1 week following this summary release. ----------------------------------------------------------------------------- Smaller Plantings Pull U.S. 2006/07 Rice Crop Down 13 Percent to 193.3 Million Cwt The 2006/07 (August-July) U.S. rough-rice crop is projected at 193.3 million hundredweight (cwt), down more than 13 percent from a year earlier and the second consecutive year of declining production. The crop is the smallest since 2000/01. This year's smaller crop is the result of a 16-percent reduction in planted area, more than offsetting a higher yield. At 2.84 million acres, rice plantings are down 543,000 acres from a year earlier and the smallest since 1996/97. The South accounts for all of the area decline. Plantings in California are nearly unchanged from a year earlier. The average yield, projected at 6,847 pounds per acre, is 211 pounds above a year earlier but still 141 pounds below the 2004/05 record. Yields are projected higher in 2006/07 in every reporting State except Louisiana. In 2006/07, rice acreage declined in all reporting States except California and Missouri, where plantings were virtually unchanged from a year earlier. Arkansas and Louisiana accounted for more than three-fourths of the 2006/07 U.S. rice area decline. Higher fuel and fertilizer prices, difficulty acquiring bank loans, and weather- related problems in some areas -- especially Louisiana and parts of Arkansas -- account for much of the area decline in the South. A second consecutive year of a cold, wet spring prevented California growers from boosting rice acreage, despite high prices and expectations of tight global supplies of medium-grain rice. Rice production is projected to decline in 2006/07 in all reporting States except California and Missouri. Crops in California and Missouri are projected to be slightly larger than a year earlier, with Missouri's production the largest on record. Arkansas and Louisiana account for more than 80 percent of the total 2006/07 production decline. By class, long-grain accounts for all of the decline in U.S. rice production in 2006/07. Long-grain production is projected at 143.7 million cwt, 24 percent below a year earlier and the smallest since 1998/99. U.S. medium-grain production is projected at 46.0 million cwt, an 8-percent increase from a year earlier. The 2006/07 short-grain crop is projected at 3.65 million cwt, up 10 percent from a year earlier and the largest since 1989/90. Total U.S. rice supplies in 2006/07 are projected at 254.3 million cwt, down 9 percent from a year earlier and the smallest since 2003/04. Based on the August 1, 2006 reported stocks by USDA's National Agricultural Statistics Service, beginning stocks are calculated at 43.0 million cwt, up 14 percent from a year earlier and the largest since 1987/88. Long-grain accounts for all of increase in beginning stocks. Medium/short-grain beginning stocks are 32 percent below a year earlier. U.S. rice imports are projected at a record 18 million cwt, up 5 percent from a year earlier, with both long- and combined medium/short-grain imports projected to be larger in 2006/07. U.S. Rice Exports Are Projected To Decline 16 Percent in 2006/07 Total rice use -- domestic and residual use plus exports -- in 2006/07 is projected at 219.8 million cwt, down almost 7 percent from a year earlier. Exports account for all of the expected decline in total use. Total exports of U.S. rice are projected to decline 16 percent to 97 million cwt, the smallest since 2001/02. Much tighter U.S. supplies, a wider U.S. price difference over Asian competitors, and impacts in some markets from the discovery of trace elements of a genetically modified (GM) strain of rice (LL Rice 601) in U.S. long-grain supplies are behind expectations of weaker U.S. exports in 2006/07. Milled rice (including brown rice) accounts for all of the projected decline in exports in 2006/07. U.S. exports of milled and brown rice (on a rough-rice basis) in 2006/07 are projected at 62 million cwt, down 24 percent from a year earlier and the smallest since 2000/01. In contrast, U.S. rough-rice exports for 2006/07 are projected at 35 million cwt, up almost 3 percent from a year earlier but still 18 percent below the 2002/03 record. By class, both long- and medium/short-grain U.S. exports are projected to be smaller in 2006/07, with long-grain accounting for the bulk of the decline. Total domestic and residual use of rice is projected to increase 3 percent in 2006/07 to a record 122.8 million cwt. Both long- and medium/short-grain domestic and residual use are expected to be higher in 2006/07, with long grain accounting for most of the increase. Annual growth in domestic and residual use has slowed since the 1980s and 1990s. U.S. 2006/07 Ending Stocks Are Projected To Decline 20 Percent to 34.5 Million Cwt U.S. ending stocks of all rice for 2006/07 are projected at 34.5 million cwt, down 8.5 million cwt from a year earlier. The resulting stocks-to-use ratio is projected at 15.7 percent, down from 18.3 percent a year earlier and the lowest since 2003/04. Long grain accounts for the bulk of the decline in U.S. ending stocks in 2006/07. Long grain ending stocks are projected to decline 25 percent to 24.6 million cwt. The long grain stocks-to-use ratio is projected at 14.9 percent, down from 18.2 percent a year earlier. Despite this year's reductions, both long-grain ending stocks and the long- grain stocks-to-use ratio are projected to be above the 2004/05 levels. For medium/short grain-rice, ending stocks for 2006/07 are projected at 9.0 million cwt, down 5 percent from a year earlier and the lowest since 1998/99. The resulting medium/short-grain stocks-to-use ratio is projected at 16.3 percent, down from 17.1 percent a year earlier and the smallest since 2002/03. Expectations of ending stocks this tight will likely keep U.S. medium/short-grain prices at current high levels for the remainder of the market year. The 2006/07 U.S. season-average farm price (SAFP) is projected at $9.00 to $9.50 per cwt, up from $7.62 a year earlier and the highest since 1997/98. The higher U.S. SAFP in 2006/07 is primarily due to smaller U.S. rice supplies. In addition, global trading prices for rice are expected to increase for a sixth consecutive year, due mostly to tighter world supplies. Global medium/short-grain prices are being supported by two consecutive below-normal harvest in California and expectations of a drought- reduced 2006/07 harvest in Australia. The preliminary October U.S. rough-rice cash price was reported at $9.46 per cwt, up 47 cents from the September average and highest since July 1998. Global Rice Production in 2006/07 Is Projected To Be the Highest On Record World rice production in 2006/07 is projected at a record 416.5 million tons (milled basis), up 1.0 million tons from a year earlier. The larger global crop is the result of increased area. Global rice supplies are projected at 497.1 million tons, up 3.5 million from a year earlier but still below the 2001/02 record of 548.3 million tons. This is the second consecutive year of increasing global rice supplies. China, the world's largest rice-producing country, accounts for the bulk of the 2006/07 global production increase, with China's rice production projected to increase 1.6 million tons to 128.0 million tons (milled basis). In addition to the increase in China, crops are projected to be larger in 2006/07 in Bangladesh, Cambodia, Indonesia, Nigeria, Russia, and Vietnam. In contrast, Australia, Japan, North and South Korea, the United States, the European Union (EU-25), and Uruguay are projected to harvest smaller crops in 2006/07. World rice consumption -- including a residual component that represents unaccounted losses and any statistical errors -- is projected at a record 418.3 million tons in 2006/07, up 1 percent from a year earlier. India accounts for most of the projected consumption increase in 2006/07. In addition to India, rice consumption is projected to be higher in 2006/07 in Bangladesh, Nigeria, the Philippines, Vietnam, and the United States. With consumption exceeding production in 2006/07 by 1.7 million tons, global rice ending stocks are projected to drop 2 percent to 78.8 million tons. The global stocks-to-use ratio is projected at 18.8 percent, down from 19.5 percent a year earlier and the smallest since 1980/81. India accounts for the biggest share of this year's expected reduction in global ending stocks. Ending stocks are also projected to decline in 2006/07 in Vietnam, Indonesia, and the United States. Global Rice Trade in 2007 Is Projected at 28.0 Million Tons, Unchanged From 2006 World trade is projected at 28.0 million tons in calendar year 2007, unchanged from a year earlier but more than 3-percent smaller than the 2005 record of 29.0 million tons. A decline in imports by several major buyers -- primarily Indonesia, Iran, the Philippines, South Korea, and Bangladesh -- is expected to offset increased imports by Brazil, North Korea, Cuba, China, Senegal, Nigeria, Madagascar, and Turkey. On the export side, weaker shipments from the United States, Vietnam, Australia, China, and Egypt are expected to be offset by stronger shipments from Thailand, India, and Uruguay. In 2006, global rice trade is projected to decrease 1 million tons to 28.0 million. Reduced shipments from India, South Korea, Vietnam, the United States, and Uruguay are projected to offset larger shipments from Argentina, Australia, China, and Cambodia. Among the major importers, smaller imports by Senegal, Saudi Arabia, North Korea, Cambodia, Nigeria, Cuba, Turkey, and Bangladesh and are projected to more than offset increased shipments to Indonesia, Iraq, South Korea, Iran, the United States, Malaysia, China, and Haiti. Global trading prices are currently up 5 percent from a year earlier, primarily due to the impact of Thailand's 2005/06 intervention purchases and a tight supply situation in Vietnam prior to the harvest of its main winter-spring crop. For the week ending November 13, Thailand's 100-percent Grade B (FOB vessel, Bangkok) rice was quoted at $299 per ton, up $14 from a year earlier. Prices had been as high as $322 per ton in July, as Thailand was holding substantial amounts of its 2004/05 and 2005/06 rough-rice crop off the market. Prices dropped in September and October due to political uncertainty in Thailand and the announcement by the new government of a 10 percent reduction in the 2006/07 intervention purchase price for the main crop harvest to begin this month. Thailand's prices increased about $5 per ton in early November in response to a slightly stronger baht and higher quotes from Vietnam. On November 12, the Government of Vietnam ordered a halt to all exports (except for previously made government-to-government sales to Cuba and Indonesia) and any new sales due to tight supplies, rising prices, and concerns over possible disease and typhoon damage to the winter-spring crop. Price quotes for Vietnam's 5-percent brokens (FOB vessel Ho Chi Minh City) were reported at $295 per ton for the week ending November 6, up $30 from both early August and January. Vietnam's prices in early November were a few dollars per ton above quotes for similar grades of Thailand's rice. Typically, Vietnam's rice trades at a discount to Thailand based on quality differences. Vietnam is currently not making any new export sales. The U.S. export price situation varies somewhat by class, with long-grain price quotes up sharply from a year earlier and medium/short quotes up slightly from a year earlier. Prices for U.S. long-grain milled rice -- No. 2, 4-percent brokens, (FAS vessel, U.S. Gulf port) -- were quoted at $419 per ton for the week ending November 14, up $44 from the start of the 2006/07 market year and $115 higher than prices a year earlier. Smaller U.S. supplies and a reluctance by some U.S. producers to market their rice are behind the much higher U.S. prices this year. U.S. prices are about $135 per ton above prices for comparable grades of Thailand's rice, up from about $70 at the start of the 2006/07 market year and about $100 above quotes a year earlier. Price quotes for long grain rough rice (FAS vessel New Orleans) for the week ending November 14 were quoted at $245 per ton, up $20 from the first week of August and $65 higher than a year earlier. U.S. medium-grain export price quotes are up slightly from already high levels reported in 2005/06. For the week ending November 14, export prices for No. 1, 4- percent brokens California medium-grain milled rice (sacked, FOB vessel, Oakland) were quoted at $525 per ton, up $10 from a year earlier. Prices are up almost $200 per ton from the 2004/05 average, a result of two consecutive below-normal harvests in California and expectations of a drought-reduced harvest in Australia in early 2007.