Rice YEARBOOK -- TEXT December 8, 2006 December 2006, ERS-RCS-2006 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- This TEXT is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The summary was released on November 20, 2006. The complete report will be available electronically in about a month. ----------------------------------------------------------------------------- Rice Yearbook, RCS-2006 by Nathan Childs (694-5292) Reviewed by WAOB: November 20, 2006 at 9:00 a.m. Rice Situation and Outlook Yearbook. Market and Trade Economics Division, Economic Research Service, U.S. Department of Agriculture, November 2006, RCS-2006. Contents Summary U.S. Outlook for 2006/07 Smaller Crop, Tighter Supplies Projected for 2006/07 U.S. Rice Exports Are Projected To Decline 16 Percent in 2006/07 U.S. 2006/07 Average Farm Price Projected Highest Since 1997/98 Recap of 2005/06 U.S. Rice Market Total U.S. Rice Supplies Were Highest on Record in 2005/06. International Outlook for 2006/07 Vietnam, the U.S., and Australia Are Projected To Export Less Rice in 2007 Record Global Production, Larger Supplies Projected for 2006/07 Smaller Imports in 2007 Are Projected for Iran, Indonesia, and the Philippines Report Coordinator Nathan Childs (202) 694-5292 Economic Contributor Nathan Childs (202) 694-5292 Managing Editor Courtney Knauth (202) 694-5383 Layout, Text Design, and Graphics Agnes Prentice (202) 694-5240 Approved by the World Agricultural Outlook Board. Summary released November 20, 2006. The Rice Outlook and the text of the Rice Yearbook may be accessed electronically. For details, call ERS Customer Service (202) 694-5050. Rice Conversions 1 cwt = 100 pounds = 2.22 bushels = .0453 metric ton 1 metric ton = 2,204.6 pounds = 22.046 cwt = 48.992 bushels 1 cwt rough rice = .032 metric ton milled 1 metric ton milled = 31 cwt rough SUMMARY Smaller 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. This is the second consecutive year of declining production, and 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-- accounted for much of the area decline in the South. A second consecutive 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 lowest 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 lowest 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 the 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 in 2006/07--domestic and residual use plus exports--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 engineered (GE) strain of rice (LLRice 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 U.S. rice 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 projected 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 tight ending stocks will likely keep U.S. medium/short-grain prices at current high or higher levels for the remainder of the market year. The 2006/07 U.S. season-average farm price (SAFP) is projected at $9.00-$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 be higher in 2006/07. Global medium/short- grain prices are being supported by two consecutive below-normal harvests 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 the 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 domestic disappearance--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 increase in global domestic disappearance in 2006/07. In addition to India, domestic disappearance of rice is projected to be higher in 2006/07 in Bangladesh, Nigeria, the Philippines, Vietnam, and the United States. With domestic disappearance 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 1981/82. 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 Brazil, 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 some 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 and India. For 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 are projected to more than offset increased shipments to Indonesia, Iraq, South Korea, Iran, the United States, Malaysia, China, and Haiti. Global price quotes are currently up 8 percent from a year earlier, primarily due to the impact of Thailand's 2005/06 intervention purchases, a stronger baht, and a temporary export ban by the Government of Vietnam in response to tight supplies. For the week ending November 20, Thailand's 100-percent Grade B milled rice (FOB vessel, Bangkok) was quoted at $306 per ton, up $23 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 that began this month. Thailand's prices increased about $5 per ton in early November in response to a stronger baht and higher quotes from Vietnam prior to the export ban. On November 12, the Government of Vietnam ordered a temporary 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 differs 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 21, up $44 from the start of the 2006/07 market year and $115 higher than prices a year earlier. Smaller U.S. supplies and 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 $130 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 $44 a year earlier. Price quotes for long grain rough rice (FAS vessel, New Orleans) for the week ending November 21 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 21, 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. U.S. Outlook for 2006/07 Smaller Crop, Tighter Supplies Projected for 2006/07 U.S. rice supplies are projected to decrease 9 percent to 254.3 million hundredweight (cwt) in 2006/07, as a much smaller crop is expected to more than offset larger beginning stocks and record imports. Despite a slightly higher yield, total rice production of 193.3 million cwt is 13 percent smaller than a year earlier and the smallest since 2000/01. The smaller crop is a result of a reduction in harvested area. At 43.0 million cwt, beginning stocks are 14 percent above a year earlier and the largest since 1987/88. Imports are projected to increase 5 percent to a record 18.0 million cwt. Long grain accounts for almost all of the supply contraction. Long grain supplies are projected to decrease 11 percent to 189.3 million cwt due to a much smaller crop. Despite a larger crop and increased imports, combined medium/short grain supplies are projected to drop 1 percent to 64.1 million cwt, the smallest since 1999/2000 and the second consecutive year of a decline. U.S. 2006/07 Rice Crop Is Projected To Decline 13 Percent to 193.3 Million Cwt The 2006/07 (August-July) U.S. rough rice crop is forecast at 193.3 million cwt, down 13 percent from a year earlier, for the second consecutive year of declining production. The 2006/07 crop is the smallest since 2000/01. This year's smaller crop is the result of a 16-percent contraction in harvested area, more than offsetting a higher average yield. At 2.84 million acres, rice plantings are down 543,000 acres from a year earlier, the lowest since 1996/97. The South accounted for all of the area decline. The average yield is projected at 6,847 pounds per acre, 3 percent above a year earlier. 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 lowest since 2000/01. Nearly all U.S. long-grain rice is grown in the South. U.S. medium-grain production is projected at 46.0 million cwt, an 8-percent increase from a year earlier. California grows more than 80 percent of the U.S. medium-grain crop. 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. California produces almost all U.S. short- grain rice, shipping much of it to Japan. In 2006/07, rice acreage declined in all reporting States except California and Missouri, where plantings were nearly unchanged from a year earlier. 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 cold, wet spring prevented California growers from boosting rice acreage, despite high prices and expectations of tight global supplies of medium-grain rice. Arkansas and Louisiana account for the bulk of the decline in southern rice acreage. Rice plantings in Arkansas decreased 14 percent to 1.41 million acres, the lowest acreage since 1997/98. Much of eastern Arkansas experienced drought-like conditions in the spring and summer of 2006, raising pumping and irrigation expenses. Louisiana's rice plantings are estimated at 350,000 acres, a 34-percent drop from a year earlier and the lowest since 1914. In addition to higher fuel and fertilizer costs, salt water intrusion from Hurricane Rita accounted for some of the 2006/07 acreage decline in Louisiana. Mississippi's rice plantings dropped 28 percent to 190,000 acres, the lowest since 1985/86. Some Mississippi rice acreage was affected by glyphosate drift that resulted from the spraying of soybean and cotton fields. Rice acreage in Texas dropped 26 percent to 150,000 acres, the smallest since 1934. Texas is the highest cost rice-producing State in the South, mostly due to higher pumping expenses and more competition for land and water from urban areas. Missouri's rice acreage remained at a record 216,000 acres, and has more than doubled in the past 15 years. Much like northeast Arkansas, the Boot Heel of Missouri has fewer problems with red rice and lower irrigation costs than the older rice-growing areas, especially the Gulf Coast and the Arkansas Grand Prairie. California's rice plantings of 529,000 acres are up 1,000 acres from a year earlier. Weather problems early in the season limited California plantings in both 2005/06 and 2006/07. U.S. Average Field Yield Is Projected To Increase 3 Percent to 6,847 Pounds Per Acre In early November, the National Agricultural Statistics Service (NASS) of the U.S. Department of Agriculture (USDA) forecasted average field yields for 2006/07 at 6,847 pounds per acre, up 211 pounds from a year earlier, but still 141 pounds below the 2004/05 record. Yields are projected higher in every reporting State except Louisiana. In 2005/06, adverse weather--including two Gulf Coast hurricanes-- reduced rice yields in both California and much of the South. Except for 2005/06, rice yields in the South have increased each year since 1999/2000, primarily due to new, higher yielding long-grain varieties and generally favorable weather across much of the region during critical growing months. Long-grain is the dominant class of rice grown in the South. Mississippi's rice yield increased 9 percent to a record 7,000 pounds in 2006/07. Like much of the Delta, the Mississippi rice-growing area experienced wind and rain damage from Hurricanes Katrina and Rita in 2005. Weather was generally favorable for Mississippi rice production in 2006/07. The average field yield in Texas is forecast at 7,000 pounds per acre, up 3 percent from a year earlier but still 100 pounds below the 2002 record. Much of the Texas rice-growing area experienced heavy showers late in the growing season that slowed the harvest and put some of the crop under water. The Arkansas rice yield is projected at 6,820 pounds per acre, 170 pounds above a year earlier but still 160 pounds below the 2004/05 record. In addition to drought conditions in eastern Arkansas, much of the Delta rice area had experienced an extremely hot July. In Missouri, field yields are projected at 6,700 pounds per acre, up 100 pounds from a year earlier but still100 pounds below the 2004/05 record. In contrast to the other southern rice growing States, Louisiana's rice yield is projected at 5,750 pounds per acre, a decline of 150 pounds from the year-earlier record. The 2006/07 Louisiana crop was hindered by weather problems--including frequent showers at harvest--and disease. California's 2006/07 field yield is projected at 7,600 pounds per acre, 220 pounds above a year earlier but well below the 2004/05 record of 8,600 pounds. In contrast to the South, field yields in California have not been trending up since 1999/2000, with average yields of 8,500 pounds per acre reported in the early 1990s. A Drop in 2006/07 Southern Rice Production More Than Offset a Larger California Crop Rice production is projected to decline in 2006/07 in all reporting States except California and Missouri. Reduced area is responsible for all of the projected production decline in Arkansas, Mississippi, and Texas. Arkansas and Louisiana account for more than 80 percent of the total 2006/07 production decline. Crops in California and Missouri are projected to be slightly larger than a year earlier. Arkansas--the largest rice growing State--accounts for the largest share of the 2006/07 production decline. The Arkansas crop is projected to have declined 12 percent to 95.5 million cwt, a result of smaller plantings. The crop is the smallest since 2000/01. Rice production in Louisiana is projected to have dropped 36 percent to 19.8 million cwt, the lowest since 1987/88. A 32-percent drop in harvested area accounts for most of the production decline. The yield was lower than a year earlier as well. Mississippi's crop is projected at 13.2 million cwt, a 21-percent drop from a year earlier and the smallest since 2000. Reduced area accounts for all of the Mississippi production decline; the yield was the highest on record. Rice production in Texas is projected at 10.4 million cwt, 24 percent below a year and the lowest since 1947/48. Reduced area accounts for all of the Texas production decline. Rice production in Texas has dropped sharply since the early 1980s and is well below the 1981/82 record of 27.2 million cwt. High costs and competition for land from urban areas have been the main factors pulling rice acreage down in Texas over the past 25 years. In contrast, the California 2006/07 crop is projected to increase 3 percent to 40.0 million cwt, almost entirely due to a higher yield. Despite high-price expectations, rice acreage expanded by only 1,000 acres, a result of an extremely wet and cool spring that delayed plantings several weeks. While some growers planted shorter maturing varieties, others shifted to alternative crops or left the land fallow. This was the second consecutive year of a below-normal California crop. Prices for California rice--about 90-percent medium grain--are expected to remain strong throughout the 2006/07 market year. Missouri's production is projected at a record 14.3 million cwt, a 2-percent increase from a year earlier, result of a record yield and unchanged area. This is the third-consecutive record crop for Missouri. Total U.S. Rice Supplies in 2006/07 Are Projected To Decrease 9 Percent to 254.3 Million Cwt Total U.S. rice supplies in 2006/07 are projected at 254.3 million cwt, down 23.8 million from a year earlier and the lowest since 2003/04. A smaller crop is projected to more than offset larger beginning stocks and record imports. Based on data from the U.S. Dept. of Agriculture's National Agricultural Statistics Service (NASS) reported in the August 2006 Rice Stocks, beginning stocks for 2006/07 are calculated at 43.0 million cwt, up 14 percent from a year earlier and the largest since 1987/88. Arkansas and Texas account for the bulk of the year-to-year increase in beginning stocks. More than half the reported stocks on August 1, 2006 were located in Arkansas. In contrast, beginning stocks on August 1, 2006 were 27 percent below a year earlier in California. U.S. rice imports for 2006/07 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. Long-grain imports are projected at a record 13 million cwt, an increase of 6 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 imports increase almost every year. India is typically the second-largest shipper of long-grain rice to the United States, accounting for 11-15 percent of the annual U.S. long-grain 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 aromatic varieties with the same quality as those produced in Asia. The United States grows and markets its own aromatic varieties, and U.S. breeders are trying to develop varieties of similar quality to the Asian aromatics. Combined medium/short-grain imports in 2006/07 are projected at a near-record 5 million cwt, an increase of 3 percent from a year earlier but still slightly below the 2003/04 record of 5.25 million cwt. Thailand ships around 60,000 tons (about 2.0 million cwt on a rough-rice basis) of specialty rice to the United States that is classified by the U.S. Census Bureau as medium- or short-grain. As with the imported jasmine rice, these imports of specialty rice increase each year. Italy supplies 3,500-4,500 tons of arborio rice--a high-quality medium-grain rice, used mostly for risotto--each year. Italy barley accounts for 1 percent of total U.S. rice imports. Since 2001/02, there have been major changes in U.S. medium/short-grain import levels due to changes in shipment levels from Australia, China, and, more recently, Egypt. Puerto Rico, the largest U.S. territory, accounts for nearly all of these purchases. Puerto Rico is considered part of the U.S. domestic market in USDA's supply and use analysis. 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. 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 those of most other maritime nations. Total U.S. rice imports have more than doubled since 1993/94. Imports now account for about 15 percent of total domestic use (excluding seed use) of rice. Much of the initial increase in U.S. consumption of aromatic rice is attributed to a big increase in the share of the U.S. population from Asia. However, aromatic rice is served today in a variety of restaurants and sold in grocery stores across much of the country. Until the United States develops varieties of sufficient quality to compete with Asian aromatic rice, imports and the import share of the domestic market will continue to expand. USDA's long-term baseline forecast for rice projects that imports will continue to increase at a faster pace than domestic consumption, accounting for a growing share of the U.S. market. Aromatic rice is expected to account for nearly all of the forecast import growth. U.S. 2006/07 Long-Grain Supplies Are Projected To Decrease 11 Percent Total supplies of long-grain rice--the dominant class of rice grown in the United States--are projected to decrease 11 percent in 2006/07 to 189.3 million cwt, the lowest since 2001/02. A much smaller crop is projected to more than offset much larger beginning stocks and record imports. Data from the August 2006 Rice Stocks report indicated long-grain stocks at the beginning of the 2006/07 market year at 32.7 million cwt, 44 percent above a year earlier and the second consecutive year of larger beginning stocks. The 143.7-million cwt long-grain crop is 33.9 million cwt smaller than a year earlier and the smallest since 2000/01. Long-grain imports of 13.0 million cwt are 6 percent larger than a year earlier and the largest on record. Total supplies of medium/short-grain rice in 2006/07 are projected to decline 1 percent to 64.1 million cwt, the second consecutive year of a supply contraction and the lowest supplies since 1999/2000. A big decline in beginning stocks is projected to more than offset a larger crop and increased imports. At 49.6 million cwt, the combined medium/short-grain crop is 9 percent larger than a year earlier, but still 20 percent below the 2004/05 medium/short-grain crop. Data from the August 2006 Rice Stocks report indicate beginning stocks of medium/short-grain rice at 9.4 million cwt, down 32 percent from a year earlier and the smallest since 1999/2000. Imports of medium/short-grain rice are projected to increase nearly 3 percent to a near-record 5 million cwt. Purchases by Puerto Rico are expected to account for more than half the U.S. imports of medium/short grain rice in 2006/07, a result of tight supplies and high prices for California rice. U.S. Rice Exports Are Projected To Decline 16 Percent in 2006/07 Total use of U.S. rice 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 year-to-year decline in total use. Total exports of U.S. rice in 2006/07 are projected at 97 million cwt, down 16 percent from a year earlier and the lowest since 2001/02. Milled rice shipments are projected to account for all of the decline in U.S. exports. U.S. rough- rice exports are projected to increase slightly. By class, both long and medium/short- grain exports are projected to decline in 2006/07, with long-grain accounting for the bulk of the decline. Total domestic and residual use is projected at a record 122.8 million cwt, an increase of 3 percent from a year earlier. Long-grain accounts for most of the expected increase in total domestic and residual use. Ending stocks of all rice are projected at 34.5 million cwt, a decline of 20 percent from a year earlier. Both long- and medium/short-grain ending stocks in 2006/07 are projected to be smaller than a year earlier. Total Use of U.S. Rice in 2006/07 Is Projected To Decrease Almost 7 Percent Total rice use--domestic and residual use plus exports--in 2006/07 is projected at 219.8 million cwt, down 15.3 million cwt from a year earlier and the lowest since 2003/04. 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 lowest since 2001/02. Milled-rice shipments (including brown rice) are projected to account for all of the decline in U.S. exports. In contrast, rough-rice exports are projected to be up slightly in 2006/07. 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. 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 engineered (GE) strain of rice--L Rice 601--in U.S. long-grain supplies are behind expectations of weaker U.S. exports in 2006/07. On August 18, 2006, the Secretary of Agriculture announced that trace amounts of GE rice were found in supplies of U.S. long-grain rice from the 2005 harvest. Later that month, the European Union (EU-25) announced that it would require testing in the EU-25 of all U.S. long-grain rice imports to prove the absence of a genetically modified strain--LLRice 601--not allowed in the EU-25. This has resulted in cancellations of some previous EU-25 purchases and a virtual halt to any additional EU-25 purchases of U.S. long grain rice. The EU-25 typically accounts for about 10 percent of U.S. long grain exports. On November 24, USDA announced it would deregulate (approve) LLRice 601. The impact of the deregulation is not known at this time. In addition, Russia, South Korea, and Japan announced that they would not purchase any U.S. long-grain rice unless the rice tested GE-free. However, the announcements by these three countries have had little impact on U.S. exports since Russia purchases only a small amount of U.S. rice and South Korea and Japan purchase exclusively medium/short-grain rice from the United States. Total domestic and residual use of rice is projected to increase 3 percent in 2006/07 to a record 122.8 million cwt, with both long- and medium/short-grain domestic and residual use expected to be higher. The domestic market (including the residual or unreported losses in processing, marketing, and transportation) is the primary outlet for U.S. rice, accounting for 51-56 percent of total use since 2003/04. Total domestic and residual use has doubled in the past 20 years, and is expected to continue increasing over the next decade. Population growth, ethnic composition, healthy lifestyles, convenience, and continued introduction of new products using rice are behind expectations of steady growth. The imported share of domestic disappearance is expected to increase over the next decade. U.S. Milled-Rice Exports Are Projected To Decline 24 Percent 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 lowest since 2000/01. The substantial contraction in U.S. milled-rice exports is primarily due to a much wider price difference over Asian competitors and the impacts in certain markets-- primarily Western Europe--from the discovery of trace amounts of GM rice in U.S. long-grain supplies. The price difference of U.S. rice over similar grades of rice from Thailand--a major competitor of the United States in Sub-Saharan Africa, parts of the Middle East, and the EU-25 is currently $130 per ton, up from $44 from a year earlier. In 2004/05 and 2005/06, the difference averaged about $50 per ton. At the start of the 2006/07 market year the difference was $72 per ton. However, since mid-August, stronger U.S. prices and--in October--weaker prices for Thailand's rice caused the difference to nearly double. The EU-25 typically purchases about 250,000 tons (milled-equivalent basis) of rice from the United States each year, almost all long-grain. Most of this rice is brown rice 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 European Union in 1995. The loss of a large share of this market in 2006/07 is not expected to be fully offset by larger sales of milled rice to other markets. The Middle East and Sub-Saharan Africa are also major markets for U.S. milled rice. Except for Turkey and the Eastern Mediterranean, these two regions are almost exclusively long-grain markets for U.S. suppliers. 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. The United States currently supplies about 10 percent of Saudi Arabia's rice imports, down from more than 50 percent two decades ago. Asian exporters have also increased their sales of aromatic rice to several Middle East markets. U.S. sales to Iraq--which re-emerged as a U.S. market in 2004/05--have partially offset losses in other Middle Eastern markets. From the summer of 1990 through late 2004, the U.S. made no commercial sales to Iraq, a major buyer of U.S. rice in the 1980s. Iraq has historically been a very price-sensitive buyer. Ghana is the only large commercial market for U.S. rice in Sub-Saharan Africa. Except for Ghana, food aid accounts for the bulk of U.S. shipments to Sub-Saharan African markets. The United States sells high-quality rice almost exclusively and is not price competitive in most of Sub-Saharan Africa. The Caribbean is another major market for U.S. milled rice, nearly all long-grain. Haiti is the largest market for the U.S. in the region. Some of the U.S. rice shipped to Haiti is food aid. In recent years, Cuba has been 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 it purchased mostly rough rice from the United States. Vietnam supplies the bulk of Cuba's rice imports. Price competitiveness of U.S. rice, supply availability among competing exporters--primarily Vietnam--the level of Cuba's rice needs, and Cuba's ability to finance purchases of U.S. rice are major variables affecting Cuba's decisions to purchase U.S. rice. U.S. finance regulations regarding sales to Cuba are more stringent than for most other buyers. 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. 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. The Philippines typically import around 60,000 tons of U.S. milled rice each year, mostly purchased under Title I of the PL 480 Program. While U.S. Rough Rice Exports Are Projected To Increase Slightly in 2006/07 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. In 2002/03, Brazil imported more than 7 million cwt of U.S. rough rice. To date, the United States has not sold any rice to Brazil in the 2006/07 market year, a result of ample supplies within the 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 generally buys a much smaller amount of U.S. long-grain milled rice each year in addition to its large 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. Turkey was once a large market for U.S. rough rice, typically importing California medium-grain rice. However, Turkey's imports of U.S. rice have dropped sharply since late 2003, when Turkey instituted a ban on imports. 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 (or more) of rough rice had to be purchased from domestic stocks. This quota system has reportedly been abolished in 2006; however, a cumbersome licensing requirement remains in effect that sharply limits U.S. shipments. The U.S. has filed a case with the World Trade Organization (WTO) against Turkey because of that country's restrictions on U.S. rice exports. The case went to panel in November 2006, and a second panel meeting is scheduled in January 2007. To date, Turkey has not purchased any U.S. rice in marketing year 2006/07. Other regions and countries regularly import smaller amounts of U.S. rough rice. Although primarily a milled rice market, the Caribbean typically imports some 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. The EU-25--mostly Spain and Italy--typically import very small amounts of U.S. rough rice each year, all long-grain. Rough rice has become a much larger share of U.S. rice exports over the past 15 years and now accounts for 30-35 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 making most of the regular purchases. Occasionally Brazil has imported larger quantities of U.S. rough rice when regional supplies have been 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. Long-Grain Exports Are Projected To Decrease 19 Percent in 2006/07 Total long-grain use in 2006/07 is projected to decline 8 percent to 164.8 million cwt, the lowest since 2003/04. Exports account for all of the projected decline in long grain total use. Long-grain exports are projected at 75 million cwt, a drop of 19 percent from a year earlier and smallest since 2001/02. A lack of price competition in the milled rice market--and impacts from the GM rice issue in some markets-- account for the weaker export forecast for U.S. long-grain rice. Domestic disappearance of long-grain rice--including the residual--is projected to increase 3 percent to a record 89.8 million cwt in 2006/07. Mexico, Central America, the Caribbean, the Middle East, the EU-25, and Sub- Saharan Africa are the largest markets for U.S. long-grain rice. In 2006/07, an expected big drop in shipments to the EU-25 due to the GM rice issue is not likely to be fully offset by increased sales to other markets, primarily Latin America. The United States typically faces little competition from Asian exporters in the Mexican and Central American rough rice markets. However, the United States faces stiff competition from Asian exporters in the Middle East, the Caribbean (mostly in Cuba), and Sub-Saharan Africa, and competition from South American exporters in the Caribbean (especially in Haiti). Total use of U.S. medium/short-grain rice in 2006/07 is projected to be virtually unchanged from a year earlier, at 55.1 million cwt. A slight decline in exports is expected to be nearly offset by stronger domestic use. Exports of medium/short grain rice are projected at 22 million cwt, a drop of 3 percent from a year earlier and the second consecutive year of decline. Tight supplies and high prices are the main factors limiting U.S. exports of medium/short-grain rice. Two consecutive years of below normal harvests in California--where the bulk of U.S. medium/short-grain rice is produced--account for the tight U.S. supplies and high prices. Medium/short-grain prices will be further supported by a drought-reduced 2006/07 harvest in Australia. Northeast Asia, the Eastern Mediterranean, and Oceania are the top markets for U.S. medium/short-grain rice. Medium/short-grain rice accounts for 10-12 percent of global rice trade, with Northeast Asia (Japan, South Korea, and Taiwan) the largest market. All imports by Japan, South Korea, and Taiwan are purchased under WTO agreements. Both Japan's and Taiwan's WTO import levels are fixed at current levels until a new agreement is reached. In late 2004, South Korea renegotiated its commitments, agreeing to double the amount of rice imported annually by 2014 in return for a 10-year delay in implementing full trade liberalization. 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 U.S. exports to these three Northeast Asian countries is from California, with Japan purchasing about half of California's rice exports and South Korea and Taiwan together accounting for more than 20 percent. Australia and China are the major U.S. competitors in the Northeast Asian commercial rice market. The Eastern Mediterranean is the second-largest regional market for U.S. medium/short-grain rice. Turkey and Jordan have historically been the largest markets in the region, followed by much smaller sales to Israel and Syria. Import restrictions have sharply lowered U.S. shipments to Turkey since 2003/04. Egypt is a major competitor in the Middle Eastern medium/short-grain market. In 2004/05 the United States picked up sales to Oceania, a region typically supplied by Australia. Papua New Guinea accounted for more than half of the record 63,500 tons of rice-- all California medium/short-grain--shipped by the United States to Oceania. Tight supplies in Australia accounted for the huge boost in U.S. shipments to Oceania in 2004/05. U.S. sales to Oceania in 2005/06 dropped by about a third, due to a rebound in Australia's production. However, U.S. sales to the region are is likely to pickup in 2006/07 due to another drought in Australia. Globally, Oceania is a relatively small market for rice because of its very small population. 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. A 9-percent reduction in total supplies is projected to more than offset a 6-percent decrease in total use. 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. The ending stocks situation differs by class of rice. 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. An 11-percent contraction in long-grain supplies is expected to more than offset an 8- percent drop in total use. The long-grain stocks-to-use ratio is projected at 14.9 percent, down from 18.2 percent a year earlier. 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. A 1-percent reduction in medium/short-grain supplies is expected to more than offset near-steady medium/short-grain use. 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 tight ending stocks will likely keep U.S. medium/short-grain prices at current high levels for the remainder of the market year. U.S. 2006/07 Average Farm Price Projected Highest Since 1997/98 The U.S. season-average farm price (SAFP) for 2006/07 is projected at $9.00-49.50 per cwt, up from $7.62 a year earlier and the highest since 1997/98. The year-to- year increase in the U.S. SAFP is largely driven by smaller U.S. supplies, as well as by higher global trading prices. The mid-October reported average cash price for U.S. rough rice of $9.46 per cwt was the highest since July 1998, up almost $1.50 from a year earlier. Price quotes for U.S. long grain rough rice have risen in every producing region since the start of the 2006/07 market year in August. Medium/short-grain prices are up slightly from last year's historically high levels. Total U.S. food aid purchases (including any Title I sales) in fiscal 2006 are estimated at 96,200 tons, down from 149,600 tons a year earlier. U.S. 2006/07 Season-Average Farm Price Is Projected To Increase to $9.00-$9.50 Per Cwt The 2006/07 U.S. season-average farm price (SAFP) is projected at $9.00-$9.50 per cwt, up from $7.62 a year earlier and the highest since $9.70 in 1998/99. The higher U.S. SAFP in 2006/07 is primarily due to a 9-percent contraction in U.S. supplies, and, to a lesser degree, higher global trading prices. The mid-October reported cash price of $9.46 per cwt was up 47 cents from the September average and almost $1.50 higher than a year earlier. The October mid-month price is the highest since July 1998. Average U.S. monthly reported cash prices for rough rice increased over the August 2005-July 2006 market year, primarily due to higher global prices. In September 2006, USDA estimated the average cash price at $8.99 per cwt, up $0.34 from a month earlier and the highest since July 2004. U.S. monthly cash prices have been above those of a year earlier every month since October 2005. Part of the price strength early in the 2006/07 market year is due to a reluctance of producers to market their rice. Through September 2006, reported marketings of U.S. rough rice were 20 percent below a year earlier. Some of the reluctance to market rice is due to uncertainty about the impact of the rice GM issue on U.S. exports, especially in Western Europe. Price quotes for U.S. long-grain rough rice have risen in every producing region since the start of the 2006/07 market year in August. The harvest of a 19 percent smaller long-grain crop this year and reluctance of producers to market their rice early in the market year are behind the higher long-grain prices. Based on data from the weekly Creed Rice Market Report, average price quotes from mills for long-grain rough rice in the Delta--which produces the largest share of the U.S. long-grain crop-- increased from $7.80 per cwt at the start of the 2006/07 market year in early August to $9.00 by mid-November. Farmers were actually asking about $1 dollar higher, with little actual trading. In Southwest Louisiana, long-grain rough rice prices were quoted at $10.00 in mid-November, up from $8.75 in late July and early August. In Texas, long-grain rough rice prices were quoted at $9.85 per cwt in mid-November, up from $9.60 in early August. Price quotes in Texas had been $10.00-$10.50 per cwt in October. There has been little reporting of rough rice quotes for 2006-crop California medium- grain rough rice. Most of the California crop is sold under a “pooling” method of marketing. Under a pooling method, 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 and Taiwan's 2006 WTO purchases), California medium-grain rough rice prices in mid- November are calculated at $12.30 per cwt, up from $11.50 at the end of the 2005/06 U.S. market year. Smaller U.S. medium-grain supplies in 2006/07 and expectations of a drought-reduced 2006/07 harvest in Australia are behind stronger California prices. California supplies almost all 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 remained between $10.50 and $11.00 almost every week since August. Prices are up more than $1.50 from a year earlier. The higher southern medium-grain prices are primarily due to stronger California prices and only a slight increase in southern medium-grain acreage in 2006/07. 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, in some years, Puerto Rico has shifted between U.S. regions if price differences for medium/short-grain rice vary widely. 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 Wednesday morning) and the loan rate. Since mid-May 2006, the adjusted world price for all three classes of rice has remained above the loan rate each week, making U.S. rice producers ineligible for marketing loan benefits. The adjusted world price has exceeded the loan rate for medium- and short-grain rice since mid-January 2006. From mid-May onward the long-grain prices exceeded the loan rate as well. From the start of the 1999/2000 market year through mid-January 2006, the adjusted world prices was less than the loan rate for all three classes of rice. For long-grain rice, the adjusted world price dropped below the loan rate in March 1999. From August 1995 until late March 1999, the adjusted world price exceeded the loan rate each week, thus marketing loan payments were not available. U.S. Food Aid Purchases for Rice Declined 36 Percent in FY 2006 Total U.S. food aid purchases for rice for fiscal 2006 (October 2005 to September 2006) are estimated at 96,200 tons, down 53,400 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 in which the rice was purchased. Food aid accounted for just 2.4 percent of total U.S. rice exports in fiscal 2006, down from 3.5 percent a year earlier. In fiscal 2005, total U.S. food aid purchases (including Title I sales) totaled 149,600 tons, down from 214,100 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 2006, there were no purchases under PL 480 Title I (concessional sales), down from 65,186 tons a year earlier. Total purchases under PL 480 Title II, or food donations, totaled 52,680 tons in fiscal 2006, down from 60,300 tons in fiscal 2005. Burkina Faso was the largest recipient of Title II donations in fiscal 2006, taking almost 9,000 tons. Sierra Leone ranked second, taking 6,900 tons, and Ethiopia, receiving 6,400 tons, was third. Other recipients of Title II donations in fiscal 2006 receiving at least 2,000 tons were: Colombia, Guatemala, Haiti, Niger, Senegal, and Somalia. In addition, about 28,000 tons of rice were purchased in fiscal 2006 under the Food for Progress program, up from about 21,000 tons in fiscal 2005. At 11,200 tons, Honduras was the largest recipient in fiscal 2006. Jamaica ranked second, receiving 5,000 tons. Cameroon received 4,000 tons; the Central African Republic, the Republic of Congo, Liberia, and Nicaragua received smaller amounts. There have been no Section 416(b) allocations or purchases since fiscal 2002. Purchases under the Food for Education program totaled 15,460 tons in fiscal 2006, up from 3,150 tons a year earlier. Cote d'Ivoire received 5,000 tons and Guatemala received 3,390 tons. Benin, Guinea-Bissau, Honduras, and Nicaragua accounted for the remainder. In fiscal 2005, Title I purchases for rice totaled 65,186 tons, up from 58,177 tons a year earlier. The Philippines accounted for all of the Title I sales in fiscal 2004 and fiscal 2005. In addition, 60,300 tons of rice was purchased in fiscal 2005 under PL 480 Title II, down almost 11,000 tons from a year earlier. Major recipients of Title II purchases in fiscal 2005 were Indonesia (11,960 tons), Madagascar (6,576 tons), Sierra Leone (6,500 tons), Benin (4,500 tons), Colombia (3,710 tons), Honduras (3,660 tons), Haiti (3,600 tons), Guatemala (3,250 tons) and the United Arab Emirates (3,000 tons). U.S. rice purchased under the Food for Progress program totaled 20,940 tons in fiscal 2005, down more than 34,000 tons from a year earlier. Cameroon was the largest recipient, receiving 11,000 tons. Mauritania ranked second, receiving 5,000 tons, Jamaica received 4,000 tons, and Cambodia received 700 tons. Food for Education purchases for fiscal 2005 totaled 3,150 tons, down from 29,400 a year earlier. Mozambique was the largest recipient, with 2,200 tons. Nicaragua and Kyrgyzstan were the other recipients. Recap of 2005/06 U.S. Rice Market Total U.S. Rice Supplies Were Highest on Record in 2005/06 Total U.S. rice supplies in 2005/06 increased 3 percent to a record 278.1 million cwt (rough basis), as a big boost in beginning stocks plus record imports more than offset a smaller crop. Long grain accounted for all of the supply increase; combined medium/short supplies contracted 16 percent. Total use of rice in 2006/07 is estimated at a near-record 235.1 million cwt, nearly 2 percent above a year earlier. Exports accounted for all of the expansion in total use. Ending stocks of all rice increased 14 percent to 43.0 million cwt, the highest since 1986/87, with long grain accounting for all of the increase. The 8.8-million-cwt increase in total U.S. rice supplies was more than offset by higher global prices in 2005/06, pushing the U.S. season-average farm price up 29 cents from a year earlier to $7.62 per cwt. Thailand's intervention purchases of rough rice--which were made at higher prices in 2005/06--were a major factor driving global prices higher. U.S. 2005/06 Rice Crop Estimated At a Near-Record 223.2 Million Cwt The 2005/06 (August-July) U.S. rough rice crop is estimated at 223.2 million cwt, down 4 percent from the year-earlier record. The smaller crop was the result of a 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 severe Gulf Coast hurricanes--accounted for most of the decline in the average yield. Medium grain accounted for all of the decline in U.S. rice production. In contrast, both long- and short-grain crops were larger. The 37,000-acre increase in total U.S. rice acreage was the result of a 104,000-acre expansion in Southern plantings more than offsetting a 67,000-acre reduction in California rice acreage. Arkansas expanded rice plantings 82,000 acres to a record 1.64 million. Mississippi boosted plantings 30,000 acres to 265,000, the largest acreage since 1999/2000. In Missouri, producers increased rice plantings 20,000 acres to a record 216,000. Lack of a more profitable planting option accounted for much of the year-to-year area expansion in all three States. In contrast, rice plantings dropped 67,000 acres in California to 528,000 acres, a result of low prices at planting and a cool, wet spring. Louisiana's rice plantings dropped 8,000 acres to 530,000 acres, and Texas rice area dropped 20,000 acres to 202,000. Low prices at planting and rising fuel prices were behind the decline in rice acreage on the Gulf Coast. Texas has the highest production costs among southern rice-growing States--primarily due to much higher water and pumping expenses-- and Louisiana achieves the lowest yields, making both States vulnerable to rising costs. The 2005/06 average field is estimated at 6,636 pounds per acre, down 352 pounds from the year-earlier record and the first decline since 1998/99. Field yields were lower in every reported States except Louisiana, with California experiencing the largest decline. California's average yield dropped 1,220 pounds per acre to 7,380 pounds, the lowest since 1999/2000. A cool, wet spring--which sharply delayed planting--and extremely hot weather during critical summer growing weeks were responsible for the 14-percent yield reduction in California. The Arkansas average field was reported down by 5 percent; the Mississippi yield by 7 percent; the Missouri yield by 3 percent, and the Texas field yield down almost 1 percent. Most of the Southern rice growing area suffered from wind and rain from two severe Gulf Coast Hurricanes. Hurricane Katrina--which struck in late August-- missed most of the Gulf Coast rice areas. The second storm, Hurricane Rita, struck the Gulf Coast in late September after most of the first crop had harvested. However, it did reduce the ratoon crop--or partial second crop harvest--on the Gulf Coast. Despite the severe storms, Louisiana's average field yield was a record 5,900 pounds per acre, up 510 pounds from a year earlier. Rice crops in 2005/06 were larger than a year earlier in all reported States except California and Texas, with record crops harvested in Arkansas and Missouri. California's rice production dropped 24 percent to 38.8 million cwt, a result of both smaller plantings and a weaker yield. Texas production dropped 8 percent to 13.7 million cwt, for the same reasons. In contrast, Arkansas harvested a record 108.8- million-cwt crop, as expanded plantings more than offset a weaker yield. Louisiana's production of 31.0 million cwt was up 9 percent from a year earlier due to a record yield. Missouri's rice crop of 14.1 million cwt was up nearly 7 percent as record plantings more than offset a yield decline. At 16.8 million cwt, Mississippi's production was up 4 percent from 2004/05, with record plantings more than offsetting a weaker yield. Total U.S. rice supplies in 2005/06 were a record 278.1 million cwt (rough basis), up 3 percent from a year earlier. A big increase in beginning stocks and larger imports more than offset the smaller crop. This was the second consecutive year of record total U.S. rice supplies. U.S. rice imports in 2005/06 are estimated at 17.1 million cwt, a 30-percent increase from a year earlier and the largest to date. Both long- and combined medium/short-grain imports were larger than a year earlier. Total supplies of long-grain rice are estimated at a record 212.5 million cwt, an increase of 11 percent. A much larger carryin, a record crop, and larger imports all supported record long-grain supplies. At 22.7 million cwt, long-grain beginning stocks were 120 percent larger than a year earlier. The 177.5-million-cwt record long-grain crop was up 4 percent from 2004/05. Long-grain imports increased 17 percent to 12.3 million cwt. Thailand supplied the bulk of the U.S. long-grain imports. The 2005/06 medium/short-grain supply situation was quite different. Total supplies of medium/short-grain rice are estimated at 64.7 million cwt, a decline of 16 percent from a year earlier. A much smaller crop more than offset a larger carryin and increased imports. At 13.8 million cwt, medium/short-grain beginning stocks were 12 percent below a year earlier. The 45.7-million-cwt medium/short-grain crop was down 26 percent from the 2004/05 crop, mostly due to a big drop in California production. At 4.9 million cwt, medium/short-grain imports were 82 percent larger than a year earlier. Purchases by Puerto Rico account for most of the medium/short- grain import expansion. U.S. Rice Exports in 2005/06 Increased 6 Percent to 115.8 Million Cwt Total rice use--domestic and residual use plus exports--in 2005/06 is estimated at 235.1 million cwt, up 3.6 million cwt from a year earlier and the second-highest on record. Exports accounted for all of the expansion in total use in 2005/06. In contrast, total domestic use--including the residual, or unreported losses in transporting, processing, and marketing plus any statistical errors--is estimated at 119.3 million cwt, down 3 percent from a year earlier. Since 2000/01, total domestic and residual use has averaged an annual growth rate of about 1 percent, much slower than during the previous two decades. Total exports in 2005/06 increased 6 percent to 115.8 million cwt. Exports were second only to the record 124.6 million cwt shipped in 2002/03. Record U.S. supplies and competitive prices were behind the robust U.S. export performance. By class, long-grain exports increased 11 percent to 93 million cwt--the second-highest on record, while medium/short-grain exports declined 9 percent to 22.8 million cwt. U.S. rough rice exports for 2005/06 are reported at 34.1 million cwt, up 1 percent from a year earlier but still 20 percent below the 2002/03 record. Mexico--the largest market for U.S. rough rice--accounted for all the growth in 2005/06. Mexico purchased a near-record 717,200 tons of U.S. rough rice in 2005/06, up 13 percent from a year earlier. U.S. shipments to Mexico have increased sharply since the early 1990s, as Mexico's rice production has declined while consumption increased. The U.S. supplies almost all of Mexico's rice imports. In contrast, U.S. shipments to Central America and Turkey--typically the second and third largest U.S. rough rice markets--were down from a year earlier. Panama, Costa Rica, and Guatemala accounted for the U.S. decline in exports to Central America. Except for Turkey, all U.S. rough rice markets are for long-grain. Combined milled and brown rice exports (on a rough basis) are estimated at 81.6 million cwt in 2005/06, up 9 percent from a year earlier. The Middle East, the Caribbean, Northeast Asia, the EU-25, Sub-Saharan Africa, and Canada are the major export markets for U.S. milled rice. Iraq, Haiti, and the EU-25 accounted for most of the expansion in U.S. milled and brown rice exports in 2005/06. U.S. exports to Iraq in 2005/06 increased by more than 200 percent to 385,000 tons (product-weight). U.S. shipments to Haiti increased 31 percent to a record 350,419 tons. The EU-25 purchased 327,000 tons of U.S. rice in 2005/06, up 17 percent from a year earlier. Canada imported a record 237,000 tons of rice from the United States in 2005/06, up 4 percent from 2004/05. At 520,000 tons, U.S. shipments to Northeast Asia were up about 4 percent from a year earlier. Virtually all Northeast Asian purchases are the result of WTO commitments. These increases were offset by a 29-percent reduction in U.S. shipments to Sub- Saharan Africa to 220,000 tons and a 33-percent reduction in U.S. shipments to Oceania to 42,500 tons. Ghana--the only large commercial market for U.S. rice in Sub-Saharan Africa--accounted for the bulk of the U.S. decline in rice exports to the region. Weaker total rice imports by Sub-Saharan Africa in 2005/06 and higher U.S. prices were behind the weaker U.S. sales. A rebound in Australia's 2005/06 crop accounted for the U.S. decline in Oceania, a region typically supplied by Australia. U.S. shipments to South America dropped 37,500 tons to 13,000 tons, with Peru accounting for nearly all of the decline. South America is typically a small market for U.S. rice unless the region has a crop shortfall. Northeast Asia, Oceania, and some Eastern Mediterranean markets buy medium/short-grain rice. The other milled rice markets take almost exclusively long grain. Canada is an exception, buying both long- and medium/short-grain rice from the United States. Long-grain accounted for all of the increase in total rice use in 2005/06. Total use of long-grain rice is estimated at a record 179.9 million cwt, up 7 percent from a year earlier. Both exports and domestic disappearance of long-grain rice were higher in 2005/06. Exports of 93.0 million were up 11 percent from a year earlier. Iraq, Mexico, Haiti, Cuba, and the EU-25 accounted for most of the increase. These increases were partially offset by a reduction in U.S. long-grain rice exports to Ghana, Peru, Costa Rica, and Guatemala. Domestic disappearance of long-grain rice in 2006/07 increased 2.1 million cwt to 86.9 million cwt. In contrast to the U.S. long-grain market, total use of U.S. medium/short-grain rice in 2005/06 declined 12 percent to 55.2 million cwt. Both domestic disappearance and exports were smaller in 2005/06. Tight supplies and much higher prices were behind the decline in medium/short grain use. Total domestic and residual use of medium/short-grain rice is estimated at 32.5 million cwt, a drop of 15 percent from a year earlier. Medium/short-grain exports are estimated at 22.8 million cwt, a drop of 12 percent from the year-earlier near-record. Turkey and Oceania accounted for the decline in U.S. medium/short-grain exports. U.S. 2005/06 Ending Stocks Increased 14 Percent to 43.0 Million Cwt U.S. ending stocks in 2005/06 are estimated at 43.0 million cwt, up 14 percent from a year earlier and the highest since 1986/87. The resulting stocks-to-use ratio is calculated at 18.3 percent, down from 16.3 percent a year earlier and the highest since 1992/93. The ending stocks situation differed by class. Long-grain ending stocks increased 44 percent to 32.7 million cwt, the highest since 1985/86. The stocks-to-use ratio is calculated at 18.2 percent, up from 13.5 percent a year earlier and the highest since 1987/88. For medium/short-grain rice, ending stocks for 2005/06 are estimated at 9.5 million cwt, down 32 percent from a year earlier. The medium/short-grain stocks- to-use ratio is calculated at 17.1 percent, down from 21.9 percent a year earlier. The 2005/06 U.S. season-average farm price (SAFP) was $7.62 per cwt, up from $7.33 a year earlier. The higher U.S. SAFP in 2005/06 was primarily due to a 16- percent drop in U.S. medium/short-grain supplies and higher global trading prices, especially for medium-grain. Despite a rebound in Australia's 2005/06 crop (harvested March-April 2006), global medium-grain supplies were tight in 2005/06, a result of a below-normal California harvest and a very small 2004/05 Australian crop. Thailand's intervention purchases--with higher prices in 2005/06--accounted for much of the global long-grain price strength. International Outlook for 2006/07 Record Global Production, Larger Supplies Projected for 2006/07 Global rice production is projected to increase 1.0 million tons in 2006/07 to a record 416.5 million, the fourth consecutive year of larger global rice production. China, Vietnam, Bangladesh, Cambodia, Indonesia, and Nigeria account for the bulk of the projected increase in 2006/07 production. Total rice supplies in 2006/07 (carryin plus production) are forecast at 497.1 million tons, up 3.5 million from a year earlier and the second consecutive year of larger global supplies. Despite the expected increase, global rice supplies are projected well below the 2001/02 record of 548.3 million tons. Global rice consumption is projected at a record 418.3 million tons, an increase of 1 percent from a year earlier. India and Bangladesh account for most of the expected increase in global rice disappearance. Global ending stocks for 2006/07 are projected at 78.8 million tons, 2 percent below a year earlier. India, Brazil, Vietnam, and the United States account for most of the expected decline in ending stocks. Through mid-November, global trading prices were up 8 percent from a year earlier. The U.S. price difference over comparable grades of Thailand's rice was about $130 per ton for the week ending November 20, up from $44 a year earlier, as U.S. prices have risen much faster than Thailand's prices. Record Production and a Larger Carryin Projected To Raise 2006/07 Global Supplies 1 Percent World rice production is projected at a record 416.5 million tons (milled basis) in 2006/07, up 1.0 million tons from a year earlier and the fourth consecutive year of increasing global rice production. China accounts for the largest share of the 2006/07 global production increase. With a record crop and larger carryin, global rice supplies are projected to increase almost 1 percent to 497.1 million tons, the second consecutive year of increasing global rice supplies. Despite this year's increase, global supplies remain projected well below the 2001/02 record of 548.3 million tons. Global rice area is projected at 152.5 million hectares, up 0.3 million from a year earlier, but still 3.3 million hectares below the 1999/2000 record. In 2006/07, larger plantings in India, China, Thailand, Brazil, Bangladesh, Indonesia, Cambodia, Nigeria, and Thailand are projected to more than offset smaller plantings in the United States, Australia, Burma, South Korea, and the EU-25. At 4.1 tons per hectare, the average global rough-rice yield is unchanged from the year-earlier record. Despite this year's 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-stature, 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. The International Rice Research Institute--as well as research centers in China--are currently developing new, much higher-yielding “Super Rice” varieties that reportedly can 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 2006/07 Projected Global Production Increase China, the world's largest rice-producing country, accounts for the bulk of the 2006/07 global production increase, with rice production projected at 128.0 million tons (milled basis). The crop is 1.6-million-tons larger than a year earlier, but well below the record 140.5-million tons produced in 1997/98. China expanded rice area by 1 percent in 2006/07 to 29.2 million hectares, the largest since 2000/01. The yield is projected to be unchanged from a year earlier. China's rice yields have been nearly flat for the past decade. Some shift to higher quality, but lower yielding, rice accounts for the lack of any sustained yield growth. Despite the larger crop, rice supplies in China in 2005/06 are expected to be virtually unchanged from a year earlier. China's supplies had declined each of the previous 6 years. In 2006/07, production is expected to about equal consumption. In 2006/07, China maintained the grain policy it adopted in 2004 and continued in 2005 that provided direct subsidies to farmers to grow rice and eliminated some taxes on grain producers. Under current policy, China is virtually self-sufficient in rice, with imports and exports accounting for a very small share of total supply and use. Among the top five exporters--Thailand, Vietnam, the United States, India, and Pakistan--only Vietnam is projected to significantly expand production in 2006/07. Vietnam--the world's second-largest rice-exporting country--is projected to increase production 2 percent to a near-record 22.5 million tons due to larger plantings and a higher yield. Vietnam's 2005/06 crop was adversely impacted by disease, pest, and weather problems. Despite this year's area expansion, rice plantings in Vietnam have declined about 4 percent since the 1999/2000 record as the government has encouraged farmers to shift land to higher-valued agricultural products. Thailand--the world's largest rice-exporting country--is projected to harvest a record 18.25 million tons of rice in 2006/07, fractionally above a year earlier, a result of a slight area expansion. At 10.25 million hectares, Thailand's rice area is the second- highest on record. Some of the expansion is due to its intervention purchases, which raise producer returns above market levels and reduce price risk. Thailand produces and exports regular long-grain rice, its premium aromatic jasmine rice, and glutinous rice. By type of rice, Thailand exports regular milled rice, parboiled rice, and brokens. India's 2006/07 production is projected at 91.0 million tons, unchanged from a year earlier. A 1-percent area expansion is offset by a slightly weaker yield. The timing and intensity of the 2006 monsoon in South Asia was somewhat erratic, adversely impacting yields. India is the world's second-largest rice producing country and has the largest rice area. Most of India's production is long-grain coarse rice. High- quality basmati makes up a very small share of India's rice production. India is the third-largest rice-exporting country. Basmati rice accounts for about a third of India's exports. The United States is the fourth-largest rice-exporting country, exporting both long- and medium/short-grain rice. The U.S. 2006/07 crop is estimated at 6.14 million tons, a drop of 14 percent due to smaller plantings. The yield was actually higher than a year earlier. More than 70 percent of U.S. production is long-grain rice. Most medium/short-grain rice is produced in California. The South produces almost all U.S. long-grain rice, the predominant class of rice grown in the United States. Pakistan's 2006/07 crop is forecast at a record 5.6 million tons, up 1 percent from a year earlier. The record crop is the result of larger area; the yield is unchanged from last year's record. In 2005/06, Pakistan sharply boosted area, yield, and production. Nearly all of Pakistan's rice crop is irrigated. Almost two-thirds of Pakistan's production is long-grain coarse rice, most of the rest is high-quality basmati. Pakistan is the fifth-largest exporter, selling more than 40 percent of its crop abroad. Among the smaller exporters, China is the only one projected to significantly increase production in 2006/07. Australia, Uruguay, the EU-25, and Guyana are projected to decrease production in 2006/07. Little change in production is projected for Egypt, Argentina, and Burma. Australia's 2006/07 crop is projected at 286,000 tons, down 62 percent from a year earlier, a result of severe drought. This is the fourth drought-reduced rice crop for Australia since 2002/03. Uruguay's 2006/07 crop is projected at 800,000 tons, down 9 percent from a year earlier, a result of slightly smaller area and a weaker yield. The EU-25 is projected to have harvested 1.66 million tons of rice in 2006/07, down 3 percent, a result of smaller area. Crops are projected to be smaller in both Italy and Spain, the major rice producers in the EU-25. Spain and Portugal have experienced severe drought in 2005/06 that reduced water supplies. Guyana's production is projected to drop 14,000 tons to 312,000 due to smaller plantings. Egypt is projected to harvest another record rice crop, projected at nearly 4.14 million tons, just 10,000 tons above a year earlier. This is the third consecutive record rice crop for Egypt. Egypt achieves the highest yields in the world. Argentina is projected to produce 750,000 tons of rice in 2006/07, just fractionally above a year earlier. The yield is the highest on record for Argentina. Argentina's yields have increased sharply since 2005/06. Burma's crop is projected at 10.5 million tons, fractionally above a year earlier. Several Major Importers Are Projected To Harvest Larger Crops in 2006/07 The Philippines, China, Malaysia, Bangladesh, Indonesia, and Japan are the largest rice-importing countries in Asia. Of the six, China and Japan are virtually self- sufficient, given their current trade and production policies. For the remaining four, imports are a major share of consumption and are critical to their food security. China's projected production of 128.0 million tons is up 1 percent from a year earlier due to larger harvested area. A large share of China's rice imports is aromatics not grown domestically. Bangladesh is projected to harvest a record 29.1 million tons of rice in 2006/07, a result of larger area. The yield is virtually unchanged from last year's record. Bangladesh has little ability to economically expand rice area in the future. Indonesia's production is projected at a record 35.1 million tons, up fractionally from a year earlier. Despite this year's larger crop, Indonesia's area, yield, and production have been nearly flat since 2003/04. Like Bangladesh, Indonesia has little ability to expand rice area, especially on the high-yielding island of Java. The Philippines are projected to harvest 9.75 million tons of rice in 2006/07, down slightly from the year-earlier record, a result of a slightly lower yield caused by typhoons in late-summer and early fall 2006. Since 2003/04, the Philippines have sharply boosted yields by adopting hybrid rice varieties. The government has subsidized the purchase of hybrid seeds. Like Indonesia and Bangladesh, the Philippines have little ability to expand area, especially on the densely populated island of Luzon. Production in Malaysia is projected to drop fractionally to 1.42 million tons, a result of a slightly weaker yield. Parts of Malaysia's rice growing areas experienced severe flooding in 2006/07. Rice production in Japan is projected to fall 4 percent to 7.94 million tons, a result of slightly smaller area and a weaker yield. Rice area in Japan has been declining for more than 35 years, mostly due to government policies aimed at diverting land to more productive agricultural uses in response to declining rice consumption. Nigeria, Iran, Iraq, the EU-25, Saudi Arabia, South Africa, Cote d'Ivoire, Brazil, and Cuba are the major non-Asian rice importers. Of the nine, only Brazil comes close to being self-sufficient. Saudi Arabia and South Africa do not grow rice. Imports account for a large share of consumption for the remaining six. Nigeria's 2006/07 production is projected at a record 2.8 million tons, up 100,000 from a year earlier, a result of both expanded area and a record yield. Nigeria has produced record crops each year since 2003/04, due to the adoption of new varieties more suitable to African soils and climate, and to expanded area. Madagascar has also had success in recent years in boosting rice area and yield. These two countries account for more than half of Sub-Saharan Africa's rice production and nearly all of the recent growth. Iran's production is projected at a record 2.38 million tons in 2006/07, up 3 percent from a year earlier, a result of both expanded area and a higher yield. Brazil's production is projected to increase slightly to 7.9 million tons due to increased area. Production is still 12 percent below the 2004/05 record, due to much smaller area. Most of the area decline is in the Northeast and Central parts of the country where the rice grown under non-irrigated conditions. Most of the rice grown in southern Brazil is irrigated. Iraq, Cuba, and Cote d'Ivoire are small rice producers and very dependent on imports for food security. Global Ending Stocks in 2006/07 Are Projected To Decline 2 Percent to 78.8 Million Tons World rice domestic disappearance--consumption plus 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 domestic disappearance increase in 2006/07. Domestic disappearance is also projected to increase in Bangladesh, Sub-Saharan Africa, Vietnam, the Philippines, the United States, and Burma. In contrast, domestic disappearance of rice is projected to decline in Japan, South Korea, and Taiwan--a long-term trend in all three countries, a result of income-driven diet diversification. With domestic disappearance 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. India accounts for most of the decline in global stocks. Ending stocks are projected to decline in Vietnam and the United States as well. The global stocks-to-use ratio is projected at 18.8 percent, down from 19.5 percent a year earlier and the smallest since 1981/82. Despite this year's projected decline, global ending stocks have been rather stable since 2004/05 after dropping from the 2000/01 record of 149.2 million tons. China accounted for most of the 2000/01-2004/05 decline in stocks. World trade is projected at 28.0 million tons in calendar year 2007, unchanged from a year earlier but 1.0 million tons smaller than the 2005 record. A decline in imports by several major buyers--primarily the Philippines, Iran, Indonesia, South Korea, and Bangladesh--is expected to offset increased imports by Sub-Saharan Africa, Brazil, China, Turkey, Cuba, and the United States. On the export side, weaker shipments from the United States, Vietnam, Australia, Egypt, China, Brazil, and Pakistan are projected to be offset by increased exports from Thailand, India, and Burma. In 2006, global rice trade is projected to decrease 1.0 million tons to 28.0 million. On the export side, weaker shipments from India, South Korea, the United States, Burma, Egypt, and Uruguay are projected to more than offset increased exports from China, Australia, Cambodia, and Argentina. Among the major importers, reduced imports by Sub-Saharan Africa, Saudi Arabia, North Korea, Cambodia, Cuba, Japan, and Turkey are projected to more than offset larger imports by Indonesia, Iraq, South Korea, Iran, the United States, and Malaysia. International Price Quotes for Long-Grain Rice Are Up 8 Percent from a Year Earlier As of mid-November 2006, global price quotes were up about 8 percent from a year earlier. Much of the increase is due to the effects of Thailand's intervention purchases and currency movements. In mid-November, Thailand's 100 percent grade B (FOB vessel, Bangkok) was quoted at $306 per ton, up $23 from a year earlier. Prices had been as high as $321 per ton in during the previous summer. Prices dropped in October in response to political uncertainty in Thailand and the announcement by the new government of a 10 percent reduction in the intervention price for the 2006/07 main crop. Thailand is still holding about 3.0 million tons of its 2005/06 crop off the market. The government has announced it will begin marketing this rice soon. Thailand's prices increased in November in response to a stronger baht and to the announcement by the Government of Vietnam on November 12 halting new exports sales, until the next harvest in early 2007. The export ban by Vietnam, was the result of rising prices and tight supplies. Previously signed government-to-government agreements with Cuba and Indonesia are exempt from the ban. Vietnam is not making any additional sales at this time and has halted quoting rice prices since November 12, a result of rising prices and of tight supplies until its winter-spring harvest in March. Price quotes for Vietnam's 5-percent brokens (FOB, Ho Chi Minh City) were reported at $295 per ton for the week ending November 12, up $33 from January. In late 2005, Vietnam temporarily halted making new export sales due to supply concerns. Sales resumed in January. Vietnam acquired a substantial share of Thailand's rice market in 2005 and 2006 due to competitive prices and adequate supplies during most of the period. The U.S. export price situation varies somewhat by class of rice. Price quotes for U.S. long-grain milled rice--No. 2, 4-percent brokens, (FAS vessel, U.S. Gulf port)-- have increased 36 percent since mid-November 2005. The much stronger prices are the result of a smaller U.S. 2006/07 long grain crop, higher global prices, and a reluctance of U.S. producers to market rice early in the season. In mid-November 2006, the U.S. price was quoted at $419 per ton, up from $375 at the start of the 2006/07 market year. After increasing the U.S. “free alongside vessel (FAS)” price to reflect an FOB price, the U.S. price difference over comparable grades of Thailand's rice was $130 per ton in mid-November, up from about $72 in early August, and well above $44 per ton a year earlier. Price quotes for California milled rice have not changed much from a year earlier, as prices were already high due to a weak 2005/06 harvest and near-record exports. A second below-normal harvest in 2006/07 was partially offset by a rebound in Australia's 2005/06 crop. In mid-November 2006, 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. Vietnam, the United States, and Australia Are Projected To Export Less Rice in 2007 Global rice trade in 2007 is projected at 28.0 million tons, unchanged from a year earlier but 1.0 million tons below the 2005 record. Weaker exports from the United States, Vietnam, Australia, Egypt, China, Brazil, and Pakistan are projected to be offset by increased exports from Thailand, India, and Burma. Global trade in 2006 of 28.0 million tons is more than 3 percent below the yea- earlier record. Weaker exports from India, South Korea, the United States, Burma, Egypt, and Uruguay are projected to more than offset increased exports from China, Australia, Cambodia, and Argentina. 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 2007, Thailand is projected to ship 8.25 million tons (milled basis) of rice, up 950,000 tons from a year earlier, but well below the 2004 record of 10.1 million tons. Record supplies in 2006/07 and tighter supplies in Vietnam and the United States are the main factors behind the stronger export forecast for Thailand in 2007. At 7.3 million tons, Thailand's shipments in 2006 are virtually unchanged from a year earlier. Thailand's 2006/07 rice production is projected at a record 18.25 million tons (milled basis), up just 50,000 tons from a year earlier due to expanded plantings. Harvested area is forecast at 10.25 million hectares, up 35,000 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 projected up fractionally from a year earlier. Thailand's yields are low compared with most other major countries in Southeast Asia--especially compared with Vietnam, Indonesia, the Philippines, and Malaysia. Traditional rice varieties--which sell at premium in global markets--account for the bulk of Thailand's production. These varieties achieve lower yields than modern varieties, which are typically grown under irrigated conditions. Three-fourths of Thailand's rice is grown under rain fed conditions. 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 more than 2 million tons of jasmine rice each year, with the United States, Hong Kong, Singapore, Senegal, and China the major buyers. 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. Yields are typically lower for both jasmine rice and glutinous rice than for nonspecialty rice. Vietnam: Vietnam is the world's second-largest rice exporter and is projected to export 4.7 million tons in 2007, down from a near-record 5.0 million in 2006. The weaker export forecast for 2007 is primarily due to tighter supplies. Vietnam is projected to produce 22.5 million tons of rice in 2006/07, up 2 percent from a year earlier. The 2005/06 crop of 22.0 million tons was 3 percent smaller than the year- earlier record, a result of pests, disease, and weather problems. Virtually all of Vietnam's rice exports are long grain, mostly intermediate and low quality, mostly shipped to Southeast Asia, Sub-Saharan Africa, the Middle East, and Cuba. Vietnam produces three rice crops a year. The 10-month crop accounts for around 21 percent of production and is harvested September-November in the North. This crop is declining in area and is the lowest-yielding of the 3 crops. The winter-spring crop accounts for almost half of total production and is harvested in February-March . The winter-spring crop has almost doubled since 1991/92 and is 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 3.0 million tons of rice in 2007, down 700,000 from a year earlier and the lowest since 2001. Much smaller supplies and a higher price difference over major Asian competitors for similar grades of rice are behind the forecast for weaker U.S. exports in 2007. The U.S. share of world rice trade is projected at 10.7 percent, down from more than 13 percent in 2005 and 2006. Southern long grain 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 being the major buyers. 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, South Korea, Turkey, Taiwan, Jordan, and Oceania. U.S. exports to Northeast Asia are part of each importer's WTO commitments. California supplies most of the U.S. medium/short grain exports. India: For 2007, India is projected to export 4.3 million tons of rice, up 500,000 tons from a year earlier but still well below the 2002 record of 6.65 million. The projected export increase is based on larger supplies in 2006/07. India's export levels often depend on the government's willingness to subsidize non-specialty rice exports. Without subsidies, India is typically limited to exporting only high-quality parboiled rice and 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, nonaromatic 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 2.9 million tons of rice in 2007, down 100,000 from 2006, but still the third highest on record for Pakistan. The 2006 export forecast of 3.0 million tons is down just 1 percent from the year-earlier record. The strong export forecasts for 2006 and 2007 are based on consecutive record crops in 2005/06 and 2006/07. Pakistan's exports increased sharply in 2005, primarily due to a big boost in supplies. Exports had been limited from 2002-2004 due to three consecutive years--2000/01-2002/03--of severe drought that reduced production and supplies. In 2006/07 Pakistan is projected to produce 5.6 million tons of rice, up 1 percent from a year earlier, the result of expanded area. At 2.65 million hectares, rice area in Pakistan is the highest on record. The 2005/06 crop of 5.55 million tons was up 13 percent from a year earlier and is the second largest crop. Expanded plantings and a record yield accounted for the 2005/06 bumper crop. Nearly all of Pakistan's rice is produced in irrigated fields. Pakistan is the only major Asian country where rice is not the staple food, allowing Pakistan to export more than 40 percent of its rice. 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 2007 are projected to decrease 57 percent to 150,000 tons, based on projections of a drought-reduced harvest in 2006/07. Since 2002, Australia's exports have been well below levels shipped from 1991 to 2001, a result of reduced crops from 2002/03-2004/05. Extremely tight water supplies-- which caused rice plantings to plummet--were the main reason for the much smaller Australian rice crops. Australia's 2006/07 rice crop is projected at 286,000 tons; down 62 percent from a year earlier, a result of much smaller area and an expected weaker yield. The 2005/06 crop is estimated at 749,000 tons, an increase of 224 percent from the extremely small 2004/05 harvest. The 2005/06 crop was the largest since 2001/02, but still well below the 2000/01 record of almost 1.3 million tons. Australia's rice farmers typically 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, second only to Egypt's high yields. Climate, varieties grown, and effective farm practices are the major factors behind Australia's high yields. Limited supplies of water are a constraint to any significant expansion in Australia's rice production. The bulk of Australia's rice is exported. Australia produces 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 some countries in the Middle East are also major export markets for Australian rice. China: China's 2007 rice exports are projected at 1.0 million tons, down 100,000 tons from a year earlier, but still above levels shipped in 2004 and 2005. China's exports are down sharply from levels shipped before 2004, due to declining supplies. China's total rice supplies have declined each year since the 1999/2000 record and are projected to drop slightly in 2006/07, despite larger production. China is expected to be a small net exporter of rice in 2006 and 2007. Except for 1989, 1995, and 1996, China had been a major net exporter of rice every year since 1960, shipping 1-3 million tons a year. China is not expected to return as a major exporter in the near term. China exports both high-quality japonica rice--mostly to Japan and South Korea-- and low-quality indica to Sub-Saharan Africa and some low-income Asian markets. Despite greater domestic demand, China's exports of high-quality japonica rice, grown mostly in northern China, have not declined. Low-quality indica rice, grown mostly in southern China, accounts for nearly all of the reduction in China's exports since 2004. From 1999-2003, 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. Egypt: Egypt is projected to export 900,000 tons of rice in 2007, down 100,000 tons from a year earlier. Egypt exported a record 1.1 million tons in 2005, a 33-percent increase from a year earlier. Egypt's rice exports have increased sharply since the late 1990s, a result of both record crops and, in some years, export subsidies. Virtually all of Egypt's rice exports are high-quality medium/short grain. Major markets include Eastern Mediterranean, parts of Europe, and the former Soviet Union. Egypt's 2006/07 rice production is projected at a record 4.14 million tons, just fractionally above a year earlier, a result of larger plantings. Egypt has harvested consecutive record crops since 2004/05. Yields are the highest in the world, a result of climate, varieties grown, and management practices. Egypt's rice growers receive substantial 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 2007, Uruguay is projected to export 750,000 tons of rice, up 50,000 tons from a year earlier, but below the 2001 record of 806,000 tons. In 2006, Uruguay's exports are projected to drop 8 percent to 700,000 tons. Another year of light imports by Brazil--Uruguay's main market--is the main factor behind the smaller shipments from Uruguay in 2006. To offset the weaker demand from Brazil in 2005 and 2006, Uruguay shipped rice to Iran and Senegal. Last year was the first time Uruguay shipped rice to Senegal. Iran has been a market for Uruguay's rice for several years. 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 2006/07, Uruguay's rice production is projected at 800,000 tons, down 9 percent from a year earlier, a result of smaller area and a weaker yield. Higher production costs and competition from other crops for farm land were likely behind the area drop. The 2005/06 crop of 880,000 tons was 4 percent above a year earlier, a result of a record yield. Production remains 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 2007, Argentina's rice exports are projected at 400,000 tons, unchanged from a year earlier but below the 1999 record of 674,000 tons. 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. Like Uruguay, Argentina has shipped rice to Senegal in response to weaker imports by Brazil in 2005 and 2006. Argentina's 2006/07 rice crop--to be harvested in April-May 2007--is forecast at 750,000 tons, virtually unchanged from a year earlier, as a record yield offsets slightly smaller plantings. Rice plantings in Argentina have declined a little each year since 2004/05. Higher costs and weaker demand from Brazil are the major factors behind the smaller rice plantings in Argentina since 2004/05. The European Union (EU-25): Although a net importer, the EU-25 regularly exports rice to non-EU-25 countries. In 2007, the EU-25 is projected to export 150,000 tons, down 25,000 tons from a year earlier and the smallest since 1995. The weaker export forecast for 2007 is based on tighter supplies. EU-25 exports have declined each year since 2004. The EU-25 is a high-cost rice producer and relies on subsidies--which are limited by the WTO--to ship most of its commercial exports. The EU-25 exports medium/short grain rice, mostly to countries along the Mediterranean. The EU ships smaller amounts of rice, mostly as food aid, to Central Asia, the Caucuses, the Balkans, and Sub-Saharan Africa. Italy accounts for most of the EU-25 rice exports. EU-25 production in 2006/07 is projected at 1.66 million tons, down 3 percent from a year earlier, a result of smaller plantings. Spain accounts for most of the area decline, a result of severe drought in 2005 that has reduced water availability. Although below record, the EU average yield is up 3 percent from a year earlier, a result of better weather. The majority of the EU-25's rice production is medium/short grain, although the long grain 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 2007 Burma is projected to export 150,000 tons of rice, up 75,000 tons from a year earlier. Exports in 2006 are the weakest since 1999. In May 2006, the government halted issuing new permits to exporters, partly in response to rising prices. Burma increased exports 46 percent in 2005 to 190,000 tons. Trade is strictly controlled by the Government of Burma. It is not clear what Burma's long- term trade policy will be. Burma was the world's largest rice exporter prior to World War II, and remained a major exporter through the mid-1960s, when its 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. 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 2006/07 rice crop is projected at 10.5 million tons, up slightly from a year earlier. Production would still be 3 percent below the 2002/03 record. Burma exports mostly low-quality, but competitively priced, long-grain rice. Most of Burma's rice exports are 25-percent brokens. Burma exports mostly to low-income countries. Smaller Imports in 2007 Are Projected for Iran, Indonesia, and the Philippines Global rice imports in 2007 are projected at 28.0 million tons, unchanged from a year earlier, but 1.0 million tons below the 2005 record. A decline in imports by several major buyers--primarily the Philippines, Iran, Indonesia, South Korea, and Bangladesh--is expected to offset increased imports by Sub-Saharan Africa, Brazil, China, Turkey, Cuba, and the United States. By region, a 7-percent drop in imports by Asia is expected to offset increased imports by Sub-Saharan Africa and Latin America. In 2006, reduced imports by Sub-Saharan Africa, Saudi Arabia, North Korea, Cambodia, Cuba, Japan, and Turkey are projected to more than offset larger imports by Indonesia, Iraq, South Korea, Iran, the United States, and Malaysia. By region, a big drop in imports by Sub-Saharan Africa, as well as weaker purchases by Latin America, will more than offset larger imports by Asia. Expectations of weaker global imports in 2006 and no import growth in 2007 are largely due to a lack of a significant weather problem in a major importing country. Major Import Regions Asia In 2007, Asia is projected to import 7.7 million tons of rice, down 7 percent from 2006 and the lowest since 2004. Bumper crops in major-importing countries--especially Indonesia, Bangladesh, and the Philippines--are the major factor behind Asia's projected weaker imports in 2007. Asia's imports are well below the 1998 record of more than 13 million tons, a result of El Nino damage to much of Southeast Asia-- especially to Indonesia and the Philippines. Asia is typically the world's largest import market for rice. However, in 2005 Sub-Saharan Africa's imports exceeded Asia's, the first time since 2001. Southeast Asia Rice Imports Are Projected To Drop 12 Percent in 2007 Southeast Asia is the largest import market for rice in Asia. Total rice imports by the region in 2007 are projected to decline 12 percent to 4.1 million tons. Record production and supplies are behind the weaker import forecast. 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 are projected to import 1.65 million tons of rice in 2007, down 250,000 tons from 2006. The smaller import forecast for 2007 is the result of a bumper crop and record supplies. The Philippines have harvested record crops or near-record crops each year since 1999/2000, a result of higher yields. Despite the record crops, imports in 2005 and in 2006 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 are projected to produce a near-record 9.75-million-ton rice crop in 2006/07, down fractionally from the year-earlier record, a result of slightly lower yield. The 2005/06 record production was the result of a higher yield; harvested area has been quite stable since 2001/02 at about 4.1 million hectares. Yields are up 22 percent since 1999/2000, after being nearly stagnant the previous decade. The government is making efforts to boost yields, including promoting and subsidizing the use of high-yielding hybrid seeds. Despite a bumper crop, domestic disappearance--projected at a record 11.25 million tons--is expected to exceed milled rice production by 1.5 million tons in 2006/07. This is the 16th 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 600,000 tons of rice in 2007, down 300,000 tons from a year earlier and well below imports in 2002 and 2003. Bumper crops since 2003/04 and large domestic supplies are behind the sharp decline in imports since 2004. In addition, in January 2004, the government placed a ban on imports of rice varieties that are grown in Indonesia as a measure to protect local producers. The ban on private imports was extended into 2005 and 2006. In September 2006, Indonesia made a major purchase from Vietnam to boost government supplies. Indonesia's 2006/07 crop is projected at a record 35.1 million tons, virtually unchanged from a year earlier. Rice area, yield, and production have been quite stable since 2003/04. 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. Malaysia: Malaysia is projected to import 850,000 tons of rice in 2007, unchanged from the year-earlier record. At 1.42 million tons, Malaysia's 2006/07 rice production is forecast more than 1 percent below a year earlier and 3 percent below the 2003/04 record. 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. Malaysia is likely to remain a major importer over the next decade. South Asia Is Projected To Reduce Rice Imports 10 Percent in 2007 South Asia is the smallest rice-importing region in Asia. In 2007, South Asia is projected to reduce imports 10 percent to 910,000 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. South Asia is the second-largest rice producing region in the world, accounting for around 30 percent of global production. Bangladesh: In 2007, Bangladesh is projected to import 600,000 tons of rice, down 100,000 tons from a year earlier, a result of record production and supplies. The 2006/07 projected record crop of 29.1 million tons is up 1 percent from a year earlier, the result of record plantings. The yield is virtually unchanged from the year-earlier record. At 11.2 million hectares, area is up 100,000 hectares from a year earlier for the fourth consecutive year of record plantings. Despite the larger area projected for 2006/07, rice plantings in Bangladesh are up only 6 percent from 20 years ago. Despite its success in increasing rice production 47 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. Sri Lanka: In 2007 Sri Lanka is projected to import 50,000 tons of rice, unchanged from a year earlier but less than one-fourth the level imported in 2004. The 2006/07 projected crop of 2.15 million tons is up 2 percent from a year earlier and the largest on record, a result of a record yield. Area is unchanged from the year-earlier near- record. The 2005/06 crop was up 6 percent from a year earlier, a result of both expanded area and a higher yield. An improved political climate has supported greater efforts at boosting rice production since 2005/06. The government is promoting greater rice production by improving the irrigation system, bringing abandoned land back 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 4 Percent in 2007 East Asia is projected to import 2.66 million tons of rice in 2007, up almost 4 percent from a year earlier and the largest since 2004. The bulk of the region's imports are purchased under WTO agreements by Japan, South Korea, and Taiwan. China, North Korea, and Hong Kong account for almost all non-WTO imports. East Asia's production is projected at 143.2 million tons in 2006/07, up 1.1 million from a year earlier, but well below the 1997/98 record of 158.0 million tons. East Asia is the largest rice-producing and rice-consuming region in the world. Except for Hong Kong (which does not grow rice) and North Korea, East Asia is nearly self-sufficient in rice given current policies. 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 2007, China is forecast to import 800,000 tons of rice, up 100,000 tons from a year earlier but well below the 1.1 million tons imported in 2004. China's 2004 imports were the largest since the mid-1990s and were the result of tight supplies and high internal prices. China has increased production each year since 2004/05, and has kept imports below 1.0 million tons. About half of China's rice imports in 2006 and 2007 are expected to be jasmine rice from Thailand. China does not produce jasmine rice. For the longer term, China is projected to be only a minor importer of nonfragrant 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: Japan's 2007 imports are projected at 650,000 tons, unchanged from a year earlier. All of Japan's rice imports are purchased as part of Japan's WTO agreements. Since fiscal year 2000/01, Japan's annual imports have been fixed at 682,000 tons on a milled basis. There have no over-quota imports since 1999 when Japan opted for tarriffication, a result of a prohibitively high over-quota tariff. The United States has supplied almost half of Japan's rice imports since 1995. Australia, China, and Thailand have supplied most of the remainder. Except for a small amount of long-grain supplied by Thailand, all of Japan's rice imports are medium- and short-grain rice. South Korea: Like Japan, South Korea partially opened its rice market to imports in 1995 as part of its WTO commitments. Its minimum access imports increased from 57,000 tons (milled basis) in fiscal 1995/96 to 204,000 tons in 2004/05. In 2005, South Korea agreed to double its annual import requirements by 2014 in return for a 10-year delay in moving to tariffication of its rice market. South Korea's rice imports are projected at 265,000 tons in 2007, down 44 percent from a year earlier. South Korea delayed its 2005 purchases, thus boosting 2006 imports to 475,000. Like Japan, South Korea is not projected to import above its WTO commitment. China, the United States, Thailand, and Australia supply nearly all of South Korea's rice imports. Medium/short grain accounts for most of South Korea's rice imports. North Korea: All of North Korea's rice imports are donations. North Korea is projected to receive 500,000 tons of rice in 2007, up from 300,000 tons a year earlier but still 100,000 tons below 2005 donations. The decline in 2006 is due to a suspension of aid from South Korea announced in September. South Korea purchases most of the rice given to North Korea. China supplies much smaller amounts. Most of the food aid purchased by South Korea is from Thailand and Vietnam. In addition, South Korea has donated some of its own rice to North Korea since 2004. Taiwan: For calendar year 2007, Taiwan is projected to import 125,000 tons (milled basis), unchanged from 2006. All of Taiwan's imports are purchased as part of Taiwan's WTO commitments. 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. The United States has supplied two-thirds of Taiwan's rice imports since 2002. The Middle East Rice imports in 2007 by the Middle East are projected at 4.4 million tons, down 200,000 from the year-earlier record. Production in 2006/07 is projected at a record 2.8 million tons, up 2 percent from a year earlier and the fourth consecutive record for the region. Iran accounts for the bulk of the rice produced in the Middle East. Turkey accounts for most of the remainder. The Middle East relies on imports to supply about two-thirds of its rice consumption, which increases each year. The region is traditionally the world's largest import market for high-quality rice--mostly parboiled, premium regular-milled long-grain varieties, and basmati. Iran, Iraq, and Saudi Arabia are the largest importers. Turkey and Jordan import much smaller amounts of rice, mostly medium/short-grain. Iran: In 2007 Iran is projected to import 900,000 tons of rice, down 300,000 tons from a year earlier and slightly below levels imported from 2002-2005. In 2006, Iran increased imports 22 percent, largely to build up stocks. Since 2002/03, Iran has harvested a record crop each year. Thailand and India currently supply most of Iran's rice imports. Iran buys mostly high-quality long-grain rice. In 2006/07, Iran's crop is projected at nearly 2.4 million tons, up 3 percent from a year earlier and the fifth consecutive record harvest. The record crops are due to expanded plantings and higher yields. Rice area in 2005/06 and 2006/07 is projected at 640,000 hectares, the highest on record. Since 2003/04, average fields have been much higher than in previous years. Iraq: Iraq is projected to import 1.2 million tons of rice in 2007, unchanged from a year earlier and second only to the 1.27 million tons imported in 2000. 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. Since 2005 the United States has been a major supplier as well. Rice 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 2007 Saudi Arabia is projected to import 1 million tons of rice, unchanged from a year earlier but below the record 1.5 million tons in 2004 and 1.36 million tons in 2005. The recent import declines are due to a major buildup in supplies in 2004/05 and 2005/06. 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 accounts for about 10 percent of the market. Turkey: Turkey's imports are projected at 300,000 tons in 2007, up 100,000 from a year earlier but nearly unchanged from 2005. In September 2003 Turkey placed a ban on new purchases of foreign rice to protect its producers from falling prices. In late 2004, Turkey substituted a quota system for an outright import ban, and continues to restrict imports through its “domestic absorption” quota system and cumbersome licensing requirements. Turkey is restricting imports to protect its producers from the effects of four consecutive record (or tied for record) crops that have boosted its rice supplies and depressed prices. At 360,000 tons, Turkey's 2006/07 rice production is unchanged from the year-earlier record, but up 33 percent from 2003/04. Both area and yield in 2005/06 and 2006/07 are the highest on record. 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. Sub-Saharan Africa Imports by Sub-Saharan Africa (including the Republic of South Africa) are projected at 7.5 million tons in 2007, up 5 percent from a year earlier but still 10 percent below the 2005 record. The higher import forecast for 2007 is based on consumption growth outstripping production. At a record 8.7 million tons, rice production in Sub- Saharan Africa in 2006/07 is barely 1 percent above a year earlier. With the exception of the Republic of South Africa and Nigeria, most of Sub-Saharan Africa is primarily a low-quality. Nigeria: Nigeria is the largest rice importer in Sub-Saharan Africa and one of the largest global rice importers. Nigeria's 2007 rice imports are projected at 1.7 million tons, up 100,000 tons from a year earlier but still below the record 1.9 million tons imported in 2001 and 2002. Despite strong production growth since 1999/2000, Nigeria has been unable to achieve self-sufficiency. Nigeria purchases mostly parboiled rice. Thailand supplied the bulk during the 1990s. Since 2001, India has been shipping a lot of parboiled rice to Nigeria as well, all at a very high subsidy. Nigeria's production in 2006/07 is projected at a record 2.8 million tons, up 100,000 tons from a year earlier. Both area and yield are the highest on record. At more than 2 million hectares, rice area is up 3 percent from a year earlier. The 2006/07 crop is the eighth consecutive record (or tied for record) crop for Nigeria. The government is encouraging farmers to expand rice plantings and is promoting the use of new, higher-yielding rice seeds developed for African ecosystems. South Africa: The Republic of South Africa is projected to import 800,000 tons of rice in 2007, unchanged from a year earlier, but below the record 850,000 tons imported in 2005. Total supplies in South Africa have increased sharply since 2004/05. Even with weaker imports in 2006, supplies are projected to be the highest on record in 2005/06 and 2006/07. India and Thailand supply most of South Africa's rice imports, mostly high-quality parboiled. Other Sub-Saharan Africa: Senegal is a major market for brokens and a major importer of rice in Sub-Saharan Africa. In 2007, Senegal is projected to import 850,000 tons of rice, up 100,000 from a year earlier but below the record 1.2 million imported in 2005. Imports 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 800,000 tons of rice in 2007, down 50,000 from 2006 and below the 2005 record of 867,000 tons. Consumption growth outstrips production in Cote d'Ivoire, with production well below the 2001/02 record. Imports account for about two-thirds of all rice consumed in Cote d'Ivoire. Ghana is projected to import 450,000 tons in 2007, up 50,000 from a year earlier but unchanged from the 2005 record. Imports account for more than 70 percent of Ghana's annual rice consumption. Guinea is projected to import 300,000 tons of rice in 2006 and 2007, unchanged from 2005, but 50,000 tons below the 2003 and 2004 record. Guinea imports 30-35 percent of its annual rice consumption. Mozambique is projected to import 350,000 tons in 2006 and 2007, unchanged from 2005, but 25,000 tons below the 2004 record. More than 70 percent of Mozambique's rice consumption is imported rice. Madagascar, the second-largest rice-producing country in Sub-Saharan Africa, is projected to import 200,000 tons in 2007, up 100,000 from a year earlier but below the 2003 and 2005 record of 250,000 tons. After being stagnant for more than a decade, rice production in Madagascar has increased sharply since 2003/04. Unlike in most of Sub-Saharan Africa, imports account for only a small share of Madagascar's rice consumption. Latin America Rice imports by Latin America (Mexico, the Caribbean, Central America, and South America) are projected at 3.5 million tons in 2007, up 9 percent from a year earlier and second only to the record 3.95 million imported in 1998. The 1998 record was partly driven by El Nino crop damage in South America. Total production in Latin America in 2006/07 is projected at 15.5 million tons, unchanged from a year earlier but below the 2004/05 record of 16.7 million tons. South America accounts for most of the region's production. 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 imports are typically from other South American countries-- primarily Uruguay and Argentina, and, to a lesser degree, Brazil. Much of the rice imported by the Andean countries is supplied by other Andean countries. Regional trading preferences and locational advantages account for much of the intraregional buying within South America. The United States typically exports rice to South America when regional supplies are insufficient. Mexico: Mexico is projected to import a record 600,000 tons in 2006 and 2007, up 47,000 tons from 2005. Increased consumption and stagnant production are behind the higher import forecast. Mexico has increased imports sharply over the past 15 years as production has declined. Mexico is unlikely to expand production and, with continued growth in consumption, will remain a growing rice market in the foreseeable future. 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 2007, the Caribbean is projected to import 1.2 million tons of rice, fractionally below the year-earlier record. Cuba is projected to import 700,000 tons in 2007, up 100,000 tons from a year earlier, but still 36,000 tons below the 2005 record. Cuba's imports have increased substantially since 2004. Vietnam is a major supplier of rice to Cuba. Since 2002, the United States has supplied rice to Cuba. In 2007, Haiti is projected to import 350,000 tons of rice, down 50,000 from the year- earlier record. Haiti's imports have more than doubled since the early 1990s and account for the bulk of rice consumed. Rising consumption and stagnant-to-declining 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 imports. The Dominican Republic is projected to import 60,000 tons of rice in 2007, one-half the amount imported a year earlier. The Dominican Republic imported virtually no rice in 2002 and 2003. Since 2003/04, smaller crops and rising consumption have necessitated larger imports. The United States is a major supplier of rice to the Dominican Republic. South America: In 2007 imports by South America are projected at 1.15 million tons, up 30 percent from a year earlier. Brazil--the largest producer in South America-- accounts for most of the increase. Rice production in South America in 2006/07 is projected at 14.1 million tons, down 0.1 million tons from a year earlier and 1.3 million below the 2004/05 record. Brazil is projected to import 750,000 tons of rice in 2007, up 200,000 tons from 2006, but well below the 1998 record of 1.6 million tons. The higher imports in 2007 are based on declining supplies caused by smaller crops since 2004/05. Brazil's 2006/07 crop is projected at 7.9 million tons, unchanged from a year earlier, but 12 percent below the 2004/05 record. The smaller crops are due to a big drop in plantings caused by lower prices and much higher production costs. Peru is the second-largest rice-producing country in South America. Peru's 2006 rice imports are projected at 80,000 tons, up 50,000 tons from a year earlier. The bulk of the rice consumed in Peru is produced locally. Colombia is the third-largest rice growing country in South America and is projected to import 100,000 tons of rice in 2007, unchanged from a year earlier. Imports are much lower than levels reported in the 1990s, a result of a big increase in production in 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 Colombia have been rather stable since 1999/2000. Central America: The region is projected to import 500,000 tons of rice in 2007, up 20,000 tons from a year earlier but still below the 2005 record of 531,000 tons. At 511,000 tons, production in Central America in 2006/07 is virtually unchanged from a year earlier, but well below the record 621,000 tons harvested in 2000/01. 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 area and production are not increasing in the region. Nicaragua and Costa Rica are typically the largest importers in the region. 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 is rough rice, nearly all long grain. Imports account for about half the rice consumed in the region, and the import share is increasing. Panama is the only Central American country that is close to self-sufficient in rice. Other regions The EU-25: The EU-25 is projected to import 925,000 tons of rice in 2007, unchanged from a year earlier. Imports in 2006 and 2007 are the lowest the lowest since at least 1999/2000, the first year supply-and-use data are reported by the U.S. Department of Agriculture for the EU-25. The reduced import levels are primarily due to record and near-record supplies. In addition, some of the reduction is likely due to weaker purchases of U.S. rice not being fully offset by larger purchases from other sources. Since late August, the EU-25 has required extensive testing of all U.S. long-grain rice to verify it has no genetically engineered (GE) before it is allowed to enter commercial markets. This costly requirement has virtually halted EU-25 purchases of U.S. long-grain rice. The EU-25 imports mostly long grain rice--with the United States and Thailand typically 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 former Soviet Union (FSU): The countries of the former Soviet Union are projected to import 551,000 tons of rice in 2006 and 2007, up 25,000 tons from 2005 and 2004. Since 2003, imports have been rather stable. Production in 2006/07 is projected at 969,000 tons, up 13 percent from a year earlier and the largest since 1993/94. Despite the increase, production remains below the 1988/89 record of 1.7 million tons. Russia accounts for about half the total rice produced in the former Soviet Union, and is responsible for nearly all of the expected increase in 2006/07. 1/ The harvest dates are for production in the southern areas of Vietnam. Harvest dates differ in the northern part of the country. Most rice production occurs in the South.