Rice YEARBOOK -- SUMMARY November, 25, 2008 November 2008, ERS-RCS-2008s Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The text of the yearbook will be available electronically about 1 week following this summary release. ----------------------------------------------------------------------------- Global and Domestic Rice Prices Have Dropped Sharply from Record Highs After nearly tripling to record highs from November 2007 to May 2008, global trading prices have dropped sharply. Price quotes for Thailand’s high-quality long-grain milled rice—a benchmark for global trading prices—have declined more than 40 percent since May. Prices for U.S. long-grain milled rice—which more than doubled from November 2007 to late April 2008—have declined more than 30 percent. The record-high trading prices last spring were largely due to trade restrictions implemented by several major exporters, a declining dollar, and rising overall commodity prices. The sharp decline in prices has largely been due to the removal of export restrictions by some countries, expectations of record global production, a stronger dollar, and impacts from the global financial crisis and economic slowdown. The movement in U.S. rough-rice prices has shown a similar pattern. U.S. rough-rice cash prices increased each month from September 2007 to August 2008, reaching a record $18.00 per cwt. By mid-October, prices had dropped about a dollar and are expected to continue falling for the remainder of the 2008/09 market year. U.S. prices are partially being supported by a reluctance of some producers to sell. The 2008/09 (August-July) U.S. season-average farm price (SAFP) is projected at a record $14.50-$15.50 per cwt, up from $12.80 a year earlier and the fourth consecutive year of a higher U.S. SAFP. The record SAFP is primarily due to record high prices at the start of the market year. By class, prices for long-grain— the dominant class of rice grown in the United States—are expected to decline more than medium/short- grain prices. The global supply situation for medium-grain rice is much tighter than for long-grain, and U.S. medium/short-grain supplies are expected to contract in 2008/09. Expanded Acreage in the South Boosts U.S. 2008/09 Rough-Rice Crop 3 Percent The 2008/09 U.S. rough-rice crop is estimated at 203.5 million cwt, up 3 percent from a year ago, but still 12 percent below the 2004/05 record. Production is higher this year in all reported States except Arkansas and California. By class, long-grain accounts for all of the production increase. Medium/short-grain production is down 12 percent. This year’s larger U.S. crop is the result of expanded area. At 2.94 million acres, plantings are more than 6 percent larger than last year. Plantings were higher in all reported States except California, with Louisiana accounting for about half the total area expansion. The increase in U.S. rice acreage was primarily driven by extremely high prices at planting and expectations of strong prices in 2008/09. In contrast, the average yield of 6,959 pounds per acre is 3 percent below last year’s record. Yields are lower in every reporting State except Texas and Missouri. Much of the yield decline in the South was due to two severe Gulf Coast hurricanes that struck in late summer, bringing substantial wind and rain across the Delta that caused a large part of the crop to lodge. In addition, much of the Delta crop was planted late due to wet weather. Progress was further delayed by adverse weather. Total U.S. rice supplies in 2008/09 are projected to be fractionally below a year earlier, as a much smaller carryin more than offsets the larger crop and record imports. Beginning stocks in 2008/09 are 25 percent below a year earlier, with long-grain accounting for most of the decline. Imports are projected at a record 25.5 million cwt, up almost 7 percent from 2008/09, with long-grain accounting for nearly all of the increase. Imports are growing as a share of the domestic market. Slight Decline in U.S. Exports Projected for 2008/09; U.S. Ending Stocks Expected To Drop 14 Percent Total exports of U.S. rice in 2008/09 are projected at 107.0 million cwt, down just 1 percent from last year. By type, rough-rice exports account for all of the decline. At 38.0 million cwt, rough-rice exports are 5 percent below a year earlier, with the Middle East accounting for most of the expected decline. In contrast, milled rice shipments (including brown rice) are projected to increase 2 percent to 69.0 million cwt, with Oceania accounting for much of the projected expansion. By class, long-grain U.S. exports are projected to increase nearly 3 percent from a year earlier, with South America accounting for most of the increase. In contrast, medium/short-grain exports are projected to decline 12 percent, with the Middle East accounting for most of the decline. Total domestic and residual use of rice is projected to increase 2 percent in 2008/09 to 126.0 million cwt, the second-highest on record. The residual component includes unreported losses in processing, handling, and transporting, as well as any statistical errors. The size of the residual can vary from year to year. Total rice use—domestic and residual use plus exports—in 2008/09 is projected at 233.0 million cwt, up almost 1 percent from a year earlier. U.S. ending stocks of all rice for 2008/09 are projected at 25.4 million cwt, down 14 percent from a year ago. The stocks-to-use ratio is calculated at 10.9 percent, down almost 2 percentage points from last year. Both ending stocks and the stocks-to-use ratio are the lowest since 2003/04. By class, medium/short-grain stocks are projected to drop 26 percent to 6.3 million cwt, the smallest in more than 26 years. Long-grain ending stocks are projected to drop 7 percent to 17.8 million cwt. Global Production in 2008/09 Projected Highest on Record, Ending Stocks Projected To Increase 3 Percent World rice production is projected at a record 434.3 million tons (milled basis) in 2008/09, up less than 1 percent from a year ago. India, Bangladesh, and China—three of the four largest producing countries— account for the bulk of the production increase. In addition, Indonesia, Thailand, South Korea, the Philippines, Nigeria, Pakistan, Argentina, and the United States are projected to harvest larger crops. In contrast, Burma, Iran, Iraq, and Vietnam are projected to harvest smaller crops. This year’s larger global production is due to record plantings, primarily a response to record high prices this spring. In contrast, the average yield is unchanged from a year earlier. Yield growth has been very small this century. With record global production and a larger carryin, global rice supplies are projected to increase 1 percent in 2008/09 to 512.7 million tons, the fourth consecutive year of expansion. Despite the increase, global supplies are still 6 percent below the 2001/02 record. Global rice disappearance is projected at a record 432.1 million tons, an increase of 1 percent from a year earlier. China, India, Indonesia, Brazil, and Bangladesh account for most of the projected increase in global rice disappearance. With production exceeding consumption by more than 2 million tons, global ending stocks are projected to increase 3 percent to 80.6 million tons. China and India account for most of the increase in global stocks. The global stocks-to-use ratio of 18.6 percent is up slightly from last year. Despite the increase, both global stocks and the stocks-to-use ratio are well below the record 146.7 million tons and 37.1 percent achieved in 2000/01. Global rice trade in calendar year 2009 is projected at 29.5 million tons, up 1 percent from a year earlier, but almost 8 percent below the 2007 record. The slight expansion in trade in 2009 is based on expectations that India and Egypt will remove their export restrictions by early 2009 and that prices will continue to decline. Indonesia, Brazil, Cuba, the European Union, Nigeria, and Saudi Arabia account for most of the expected increase in imports in 2009. Pakistan, Vietnam, Egypt, and China account for most of the projected increase in exports. In 2008, global trade is projected to decline more than 8 percent to 29.2 million tons, primarily due to export bans and restrictions implemented by several traders and record high trading prices. India and Egypt— which implemented bans in early 2008—account for most of the reduction in global exports. China and Australia are also projected to export less rice in 2008. Among major importers, Indonesia and Bangladesh are projected to report the largest decline.