RICE OUTLOOK RCS-0395 Economic Research Service U.S. Department of Agriculture March 13, 1995 Washington, D.C. 20005-4788 Approved by the World Agricultural Outlook Board I. DOMESTIC AND INTERNATIONAL PRICE OUTLOOK & MARKET SUMMARY NEAR TERM PRICE OUTLOOK: U.S. farm and export prices for rice, along with internationally traded rice prices, are projected steady near current levels through the remainder of the 1994/95 marketing year (see tables 2,3, and 5). Continued strong demand from Indonesia and China is expected to prevent a significant decline in prices until late May or early June when Thai and Burmese second-crop harvests come to market. Burma and Pakistan have been actively exporting rice. However, near-term import demand remains focused on Thailand, the world's leading rice exporter, supporting Thai prices near current levels. Thailand and Burma are projected to harvest large dry-season crops in May, causing possible price weakeness prior to the 1995 crops. By June, the market will focus on 1995 crop prospects in the major rice producing countries of Asia. Nearly 60 percent of South and Southeast Asian rice production is rain fed and depends on the summer monsoons running from May through October for rainfall. As a result, the market is sensitive to start-up delays or below-normal monsoon precipitation. U.S. f.o.b., No. 2, 4-percent broken (high-quality long-grain) rice offer price quotes out of Houston have been steady at $298 per ton the past 4 months, compared with 1993/94's average of $439 per ton. Similar type and quality Thai rice (100 percent, grade B) has shown greater strength with f.o.b. offer quotes out of Bangkok at $290 per ton in early March 1995, down only slightly from 1993/94's August-July average of $294. MAJOR DETAILS Indonesia's 1995 import needs are projected at 1.8 million tons, the largest since 1980. Delayed fall plantings and unfavorable early growing conditions could reduce crop prospects in the coming months, further increasing import needs. Indonesia's burgeoning population leaves little margin for production shortfalls. Indonesia traditionally buys low-quality long-grain rice because of the lower price. Stronger low-quality prices provide a floor for high-quality long- grain prices in Thailand and Vietnam, thus propping up Asian long-grain prices. China's 1995 imports are projected at 1 million tons, easily surpassing projected exports of 500,000 tons and transforming China into a net importer of rice for the first time since 1989. This is a dramatic change from the past 3 years when China's annual net exports averaged over 1 million tons. Traditionally China imports high-quality long-grain rice, mostly from Thailand, for use in urban centers. However, in 1994, China's estimated 700,000 tons of official imports included a significant share of intermediate- and low-quality rice. In addition, there have been numerous reports of large unofficial rice imports from Vietnam, suggesting that China's actual 1994 rice imports may have exceeded 1 million tons. The projected strength in Chinese and Indonesian demand has offset a projected near-record main-season rice harvest in Vietnam (the world's third leading rice exporter) in March and an estimated record Thai main-season harvest in November-December. Vietnam is projected to harvest a record 14.8 million tons in 1994/95. This includes a large main-season crop of 6.5 million tons harvested during February-March. Vietnam's large over-the-border trade with China, underway since November, continues strong, thus limiting Indonesia's access to Vietnam's rice supplies. India also has large exportable supplies which, if priced low enough, could dampen world prices prior to May. However, India has had trouble moving its crop into international markets. II. U.S. SITUATION AND OUTLOOK The U.S. season average farm price for rice in 1994/95 is projected to range from $6.50 to $7.00 per cwt, compared with 1993/94's $7.98. Through the first 7 months, the U.S. monthly farm price received has averaged $6.63 per cwt. On January 31, USDA announced a 5-percent ARP. The 5-percent ARP, plus lower farm prices in 1994/95, suggests U.S. rice plantings in 1995 of about 3.0 million acres, down 10 percent from a year earlier. Based on a trend yield of 5,720 pounds per acre, this implies 1995 production of 168 million cwt (rough), down 15 percent. U.S. exports are projected at 89 million cwt (rough) in 1994/95, up nearly 12 percent from a year earlier and slightly below the 1980/81 record of 91.4 million. On a calendar year basis, U.S. exports are projected at 2.8 million tons (milled) in 1995 versus an estimated 2.65 million in 1994. Large import demand from China and Indonesia since November has prevented Asian export prices from falling to their traditional large discount with U.S. export prices. The U.S. export price premium (U.S. No. 2, 4-percent broken, f.o.b. Gulf port versus Thai 100 percent, Grade B, f.o.b. Bangkok) fell to $8 per ton in early March, the lowest in 4 years. Thus, the United States remains very competitive in Western Hemisphere and European markets. Due to a good competitive position, U.S. rice exports and sales commitments combined are running 42 percent ahead of last year's pace through the first 7 months of 1994/95, according to the U.S. Export Sales Report of March 9, 1995. Through December 30, 1994, sales of rice under the Export Enhancement Program (EEP) totaled 103,640 tons for 1994/95, nearly double 1993/94's 53,680. However, the August 10, 1994, initiative of 300,000 tons expired on December 31, 1994. No new EEP initiative for 1995 has been announced yet. U.S. domestic and residual use is projected at a record 102 million cwt (rough) in 1994/95, up 5 percent from 1993/94, on the strength of continued growth in total food use and per capita use. U.S. per capita rice use is projected at a record 22.9 pounds (milled). USDA's first indication of producer planting intentions for the 1995/96 U.S. rice crop will be in the Prospective Plantings report released on March 31, 1995. A summary of crop activity and progress by State, including the national average, will be published weekly by the National Agricultural Statistics Service (NASS) in the Crop Progress report beginning the first week in April. YEAR-TO-YEAR PRICE OUTLOOK: U.S. farm and export prices for rice are projected sharply lower in 1994/95 on the outlook for record world production, abundant global export supplies, and the withdrawal of Japan from the world market as the leading rice importer. Total world production (milled basis) is projected up at a record 354.3 million tons for 1994/95 (versus 352.2 in 1993/94) including larger foreign production of 347.7 million tons (versus 347.2) and a record U.S. rice crop of 6.6 million tons (versus 5.0). World trade is projected at a robust 15.7 million tons in 1995, down only slightly from 1994's record 16.1 million tons. Strong growth in demand from traditional rice markets nearly offsets the expected reduction in Japan's imports from 2.3 million tons in 1994 to only 0.3 million in 1995. MONTH-TO-MONTH HIGHLIGHTS USDA raised its estimate of the 1994/95 national average milling yield to 73 percent, up sharply from last year's 70 percent. The improved milling yield is, in part, attributable to signficantly improved crop quality. USDA raised its forecast for the 1994/95 season average price to $6.50-7.00 per cwt, up from $6.00-7.00 in February, on the strength of continued strong U.S. exports and firm Asian competitor prices. NASS reported February's U.S. average farm price at a preliminary $6.68 per cwt. NASS also revised the January estimate to $6.78, up from an initial estimate of $6.60. ****************************************************************************** * INFORMATION CONTACTS AT THE ECONOMIC RESEARCH SERVICE: * * * * Randall D. Schnepf, international and domestic (202) 501-8513 * * Bryan W. Just, domestic (202) 501-8524 * * * * The next Rice Monthly Outlook Report will be available on April 12, 1995. * ****************************************************************************** Note: Readers may also refer to the following ERS AutoFAX documents. 2160 "Rice Outlook and Analysis Documents." Provides a list of available data tables, reports, and miscellaneous information concerning U.S. and international rice. NOTE: ] U.S. rice production, by State, was revised in NASS' Crop Production--1994 Summary released January 12. The State breakout is presented in table 6. Tables: Table 1- U.S. rice supply and use, 1989/90 to present Table 2- U.S. monthly average farm prices and marketings, 1992/93 to present Table 3- USDA calculated world market rice prices, 1992/93 to present Table 4- U.S. exports and sales commitments, 1988/89 to present Table 5- U.S. and Thailand f.o.b. export prices, 1986/87 to present Table 6- State and U.S. rice acreage, yield, and production, by class Table 1- U.S. rice supply and use, 1989/90 to present 1/ ============================================================================== º º 1994/95 Item º 1989/90 1990/91 1991/92 1992/93 1993/94 º 2/ 1995/96 ============================================================================== º º TOTAL RICE º Percent º ARP 3/ º 25 20 5 0 5 º 0 5 º º Area º Million acres º Planted º 2.731 2.897 2.884 3.176 2.920 º 3.353 Harvested º 2.687 2.823 2.781 3.132 2.833 º 3.316 º º º Pounds per harvested acre º Yield º 5,749 5,529 5,731 5,736 5,510 º 5,964 º º º Million hundredweight º Beg. Stocks º 26.7 26.3 24.6 27.4 39.4 º 26.0 Production º 154.5 156.1 159.4 179.7 156.1 º 197.8 Imports º 4.4 4.8 5.3 6.1 6.9 º 8.0 Total Supplyº 185.6 187.2 189.2 213.2 202.5 º 231.8 º º Food º 60.2 63.7 67.1 69.0 71.2 º 74.0 Seed º 3.6 3.6 3.9 3.6 4.2 º 4.0 Brewer's use º 15.4 15.3 15.4 15.1 15.1 º 15.0 Residual 4/ º 3.0 9.0 9.0 9.0 6.5 º 9.0 Domestic Useº 82.2 91.6 95.4 96.7 96.9 º 102.0 º º Exports º 77.1 71.0 66.4 77.0 79.6 º 89.0 Total Use º 159.3 162.6 161.8 173.7 176.5 º 191.0 º º End. Stocks º 26.3 24.6 27.4 39.4 26.0 º 40.8 CCC inv. º 0.0 0.1 0.4 0.1 0.0 º 0.1 Free Stocks º 26.3 24.5 27.0 39.3 26.0 º 40.7 º º º Percent º Stocks-use º 16.5 15.1 16.9 22.7 14.7 º 21.3 º º Average Farm º $/cwt º Price 5/ º 7.35 6.68 7.58 5.89 7.98 º 6.50-7.00 º º Average º Percent º Milling Rate º 72.6 72.0 70.5 70.0 70.0 º 73.0 ============================================================================== 1/ Marketing year (August 1 to July 31); rough equivalent of rough and milled rice. 2/ Projected. 3/ 1995/96 final ARP was announced January 31, 1995. 4/ Residual: unreported use, processing losses, and estimating errors. 5/ Marketing year weighted average price received by farmers. Table 2- U.S. monthly average farm prices and marketings, rough equivalent basis, 1992/93 to present ============================================================================== º 1992/93 1993/94 1994/95 º ------------------- ------------------- -------------------- Month º $/cwt 1,000 cwt $/cwt 1,000 cwt $/cwt 1,000 cwt ============================================================================== Aug º 6.60 10,274 5.19 12,411 6.75 11,499 Sep º 6.41 12,496 5.21 12,950 6.69 12,606 Oct º 6.40 14,012 6.10 14,804 6.47 13,381 Nov º 6.42 10,844 8.06 15,228 6.53 15,548 Dec º 6.39 12,926 8.91 12,722 6.56 17,479 Jan º 6.36 13,228 8.98 14,106 6.78 17,781 Feb º 6.06 12,940 10.10 9,750 6.68 1/ Mar º 5.64 13,197 10.20 11,594 Apr º 5.52 11,274 9.93 8,113 May º 5.24 11,335 10.00 7,854 Jun º 5.02 12,551 8.88 8,708 Jul º 4.92 14,062 7.80 7,986 º Average 2/ º 5.89 12,428 8.09 11,352 6.63 14,716 Total 3/ º 149,139 136,226 6.50-7.00 88,294 ============================================================================== 1/ February price is a preliminary mid-month price. 2/ Price is marketing year weighted average; 1994/95 is for August-January. 3/ Total volume marketed. 1994/95 price range is a USDA projection. Table 3- USDA calculated world market rice prices, 1992/93 to present 1/ ============================================================================= º 1992/93 1993/94 1994/95 3/ Month 2/ º -------------------- -------------------- -------------------- º Long Medium Short Long Medium Short Long Medium Short ============================================================================= º $/cwt Aug º 5.91 5.45 5.43 4.11 3.76 3.57 5.33 5.64 5.33 Sep º 5.70 5.24 5.22 4.20 3.84 3.65 5.62 5.67 5.36 Oct º 5.53 5.05 5.02 4.88 4.48 4.26 5.72 5.61 5.32 Nov º 5.48 5.00 4.97 6.56 6.15 5.86 5.79 5.59 5.31 Dec º 5.36 4.92 4.89 7.26 6.85 6.53 5.81 5.57 5.30 Jan º 5.29 4.82 4.79 7.35 7.00 6.73 6.12 5.59 5.36 Feb º 5.23 4.72 4.69 7.49 7.31 7.20 6.32 5.67 5.44 Mar º 4.98 4.45 4.43 7.29 7.30 7.18 6.32 5.71 5.48 Apr º 4.63 4.20 4.17 6.48 7.25 7.11 May º 4.38 3.97 3.95 5.91 7.19 7.03 Jun º 4.25 3.83 3.80 5.32 7.05 6.87 Jul º 4.25 3.83 3.80 5.22 6.27 6.12 º Average 2/ º 5.08 4.62 4.60 6.00 6.20 6.01 5.88 5.63 5.36 ============================================================================= 1/ Loan rate bases (rough); repayment rates for 1989-94 crops are the higher of the world price or 70 percent of the loan rate for the specified class of rice. 2/ Simple average of weekly announced world market price. 3/ March is preliminary. The 1994/95 average is for August-March. Table 4- U.S. exports and sales commitments, 1992/93 to present 1/ ============================================================================== º º 1993/94 º 1994/95 Country º1988/89 1989/90 1990/91 1991/92 1992/93 º----------------º-------- or º º as of º as of Region º Final Final Final Final Final º Final 03/02/94º03/02/95 ============================================================================== º 1,000 metric tons º º Eur. Union º 442 359 383 263 362 º 327 260 º 335 Oth W Eur. º 71 40 46 44 47 º 54 44 º 49 Turkey º 98 138 153 154 191 º 67 67 º 167 East Eur. º 18 20 30 39 46 º 10 10 º 33 FSU º 0 0 0 42 15 º 4 2 º 19 º º º Japan º 0 0 0 0 0 º 568 317 º 1 Iran º 0 0 0 7 130 º 121 151 º 126 Iraq º 434 299 0 0 0 º 0 0 º 0 S. Arabia º 162 145 180 146 205 º 157 137 º 125 Oth Asia/MEº 229 169 124 75 103 º 71 62 º 137 º º º Cote d'Iv. º 16 35 78 56 92 º 67 70 º 41 Senegal º 64 57 62 37 87 º 75 61 º 26 RSA º 64 103 87 103 111 º 90 92 º 109 Oth Africa º 124 104 89 47 25 º 26 25 º 34 º º º Canada º 95 96 109 88 98 º 91 81 º 103 Mexico º 58 198 87 118 249 º 177 132 º 168 Haiti º 1 17 34 97 117 º 43 17 º 60 Jamaica º 66 68 74 56 30 º 63 40 º 43 Brazil º 0 0 295 187 0 º 12 12 º 363 Peru º 27 161 25 42 34 º 3 1 º 67 Oth W Hem. º 247 116 155 184 134 º 125 92 º 294 º º º Total º 2,248 2,137 2,009 1,783 2,075 º 2,149 1,672 º 2,367 ------------------------------------------------------------------------------ Census 2/ º 2,786 2,532 2,300 2,113 2,443 º 2,523 º2,947 4/ Diff. 3/ º 538 396 291 329 367 º 373 º 382 5/ ============================================================================== 1/ Columns labelled "Final" represent final exports as reported by the "U.S. Export Sales Report," FAS, USDA. Columns labelled "as of" represent combined exports plus sales commitments. 2/ The U.S. Census Bureau rice export total is the official export total. 3/ The "U.S. Export Sales Report" does not include U.S. Government exports under PL 480 Titles II and III, Section 416, and Food for Peace exports. In addition, the "U.S. Export Sales Report" is on a product-weight basis, whereas the final U.S. Census Bureau rice export total is converted to a milled-weight basis. 4/ USDA forecast. 5/ The average difference between the Census and Export Sales Report for 1988/89-1993/94. Table 5- U.S. and Thailand f.o.b. export prices, 1986/87 to present ============================================================================== Month º U.S. 2/ Bangkok, Long Grain 4/ or º ------------------------- --------------------------------------- Marketing º LG 3/ MG 3/ Parboiled 100% 5% Par- 15% 35% A.1 5/ Year 1/ º Houston Calif. Houston Grade B boiled Broken Broken Special ============================================================================== º $/metric ton 1986/87 º 240 282 311 190 171 173 154 122 1987/88 º 421 366 486 273 261 256 236 204 1988/89 º 324 361 386 292 284 275 256 232 1989/90 º 342 352 400 292 259 262 214 172 1990/91 º 331 347 400 296 277 261 213 169 1991/92 º 368 384 418 287 263 258 222 184 1992/93 º 322 383 349 244 227 217 193 163 º Aug '93 º 287 342 331 218 214 196 179 156 Sep '93 º 287 342 331 216 213 192 177 158 Oct '93 º 338 342 375 272 222 237 207 162 Nov '93 º 505 408 536 337 264 288 242 167 Dec '93 º 551 485 573 330 272 281 234 156 Jan '94 º 551 485 595 376 272 305 241 151 Feb '94 º 551 485 595 390 266 313 238 155 Mar '94 º 546 485 579 330 248 240 207 155 Apr '94 º 496 507 540 331 238 242 205 157 May '94 º 423 540 472 259 235 213 190 160 Jun '94 º 386 507 444 232 228 200 186 165 Jul '94 º 342 480 394 237 251 211 197 178 1993/94 º 439 451 480 294 244 243 208 160 º Aug '94 º 313 428 353 259 271 237 222 200 Sep '94 º 309 397 344 267 265 246 233 210 Oct '94 º 304 397 331 272 262 249 238 216 Nov '94 º 298 397 331 272 263 249 236 215 Dec '94 º 298 397 331 270 259 250 237 222 Jan '95 º 298 366 331 282 264 265 252 232 Feb '95 º 298 358 342 289 266 270 255 226 Mar '95 6/º 298 353 342 290 266 271 251 219 ============================================================================== 1/ Simple average of weekly price quotes. 2/ Lowest quote offered. 3/ Number 2, 4 percent. 4/ Nominal price quotes collected by the U.S. embassy, Bangkok. 5/ 100-percent broken. 6/ Preliminary data. Table 6--State and U.S. rice acreage, yield, and production, by class =========================================================================== Area harvested Yield Production -------------- -------------- -------------- State 1993 1994 1993 1994 1993 1994 =========================================================================== --1,000 acres-- ---Lbs/acre--- ---1,000 cwt---- Long grain: Arkansas 1,070 1200 5,040 5,680 53,928 68,160 California 14 7 8,179 8,100 1,145 567 Louisiana 315 397 4,650 4,890 14,648 19,413 Mississippi 245 313 5,300 5,900 12,985 18,467 Missouri 93 123 4,900 5,200 4,557 6,396 Texas 291 339 5,430 6,030 15,801 20,442 United States 2,028 2,379 5,082 5,609 103,064 133,445 Medium grain: Arkansas 157 218 5,100 5,810 8,007 12,666 California 410 468 8,320 8,510 34,112 39,827 Louisiana 215 223 4,400 4,500 9,460 10,035 Missouri -- 1 -- 5,200 -- 52 Texas 7 15 4,200 5,400 294 810 United States 789 925 6,575 6,853 51,873 63,390 Short grain: Arkansas 3 2 5,300 5,700 159 114 California 13 10 7,800 8,300 1,014 830 United States 16 12 7,331 7,867 1,173 944 Total: Arkansas 1,330 1,420 4,669 5,700 62,094 80,940 California 437 485 8,300 8,500 36,271 41,224 Louisiana 560 620 4,305 4,750 24,108 29,448 Mississippi 245 314 5,300 5,898 12,985 18,519 Missouri 100 138 4,851 5,222 4,851 7,206 Texas 298 339 5,302 6,030 15,801 20,442 United States 2,970 3,316 5,256 5,964 156,110 197,779 =========================================================================== -- = not applicable. Source USDA, National Agricultural Statistics Service. +---------------------------------------------------------------+ | JIM HORSFIELD, CHIEF, RESEARCH SUPPORT & TRAINING BRANCH | |INFORMATION SERVICES DIVISION, ECONOMIC RESEARCH SERVICE, USDA | | ROOM 724, 1301 N.Y. AVE, NW, WASHINGTON, DC 20005-4788 | | VOICE: 202-219-0698, FAX: 202-219-0044, BITNET: JIMH@ERS | +---------------------------------------------------------------+