RICE OUTLOOK April 12, 1995 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- RICE OUTLOOK is published monthly (except January) by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. RCS-- 0495. ----------------------------------------------------------------------------- PRICE OUTLOOK & MARKET SUMMARY NEAR TERM PRICE OUTLOOK: U.S. farm prices for rice are projected steady through the remainder of the 1994/95 marketing year (see tables 2, 3, and 5). The U.S. season average farm price (SAFP) in 1994/95 is projected to range from $6.50 to $6.80 per cwt, compared with 1993/94's $7.98. Farm prices must average $6.62 for the remainder of the crop year for the SAFP to equal the mid-point ($6.65) of the projected range. Through the first 8 months, the U.S. monthly farm price has averaged $6.64 per cwt. Larger than expected 1995 planting intentions for rice of 3.135 million acres, plus a rapid start on spring planting, may begin to pressure U.S. prices as the possibility for reduced area and yields recedes. An early planting start increases the likelihood of meeting acreage objectives, while allowing the crop a favorable start. Internationally traded rice prices may begin to show some weakness by early May when Thailand and Burma begin harvesting projected large dry-season crops. By June, the international market will focus on the 1995 crop prospects in the major rice producing countries of Asia. 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 6 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 $294 in early March 1995, unchanged from 1993/94's August-July average. INTERNATIONAL SITUATION AND OUTLOOK Continued strong demand from Indonesia and China has prevented any significant decline in international prices since November. Burma continues to actively export rice. However, near-term import demand remains focused on Thailand, the world's leading rice exporter, supporting Thai prices near current levels. Through the first 3 months of the calendar year, Thailand has reported exports and sales commitments of 3.3 million tons, sharply up from last year's 2.6 million. Indonesia's 1995 import needs are projected at 1.8 million tons, the largest since 1980. However, diminishing prospects for the main-season 1995 rice crop in Java could further increase import needs. The crop was subject to delayed fall plantings and unfavorable early growing conditions in November-December. Since January the crop has been subject to unrelenting rainfall that caused flooding and made conditions generally unfavorable for rice growth. 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. 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. This large over-the-border rice flow from Vietnam into China continues unabated in 1995 and is, in part, responsible for continued strength in Asian rice prices. U.S. SITUATION AND OUTLOOK In early March, farmers indicated they plan to plant 3.135 million acres to rice in 1995 (USDA's Prospective Plantings report), down 6.5 percent from 1994, but significantly above some analysts' expectations that planting intentions would be at or below 3 million acres. A 5-percent ARP (announced by USDA on January 31), plus lower farm prices in 1994/95, are responsible for the reduced planting intentions. The Prospective Plantings report released March 31, 1995, was the first information available on 1995 production. The planting intentions are based primarily on a survey of farm operators during the first 2 weeks of March. As the planting period matures, producers may revise their intentions due to changes in the weather, economic conditions, availability of inputs, and/or plantings report information. The Acreage report, scheduled for release on June 30, will update the March estimates. Table T1 compares early season planting intentions with actual plantings. For the previous 10 years, the largest increase in actual plantings was 181,000 in 1992. The largest decrease was 205,000 in 1993. Planting progress in each of these years influenced final acreage. In 1992 planting progress was ahead of the average pace, and in 1993, planting progress was slower than average. Since 1991, changes in actual plantings have been negatively correlated with changes in the ARP set-aside from the previous year, but positively correlated with planting progress. USDA will release its first official 1995 rice crop projection in May. Based on a trend yield of 5,720 pounds per acre and the planting intentions, ERS unofficially projects 1995 rice production at 176 million cwt (rough), down 11 percent for 1994, but still the third largest on record. Table T1- U.S. rice plantings =================================================== Change from Year Prospective Actual previous year =================================================== ****** (1,000) ****** 1985 2,468 2,512 1.8 1986 2,270 2,381 4.9 1987 2,319 2,356 1.6 1988 2,803 2,933 4.6 1989 2,861 2,731 -4.5 1990 2,902 2,897 -0.2 1991 2,812 2,878 2.3 1992 2,995 3,176 6.0 1993 3,125 2,920 -6.6 1994 3,290 3,353 1.9 1995P 3,135 ================================================ Source: USDA, NASS Good weather in most of the rice-growing areas has gotten planting off to a good start. USDA's Crop Progress report indicated that planting in the five major rice growing States (Arkansas, California, Louisiana, Mississippi, and Texas) is 11 percent completed as of April 3, well ahead of last year's 8 percent and the 5-year average of 7 percent. U.S. exports are projected at 2.9 million tons (product weight) in 1994/95, up nearly 17 percent from a year earlier and slightly below the 1980/81 record of 3.0 million. On a rough basis, U.S. exports are projected at 83 million cwt, up only 6 percent. Shipments of rough rice have increased substantially in 1994/95. Through the first 8 months of the crop year, nearly 700,000 tons of rough rice have been exported, compared with only 165,000 tons shipped during all of last year. 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 $4 per ton in early April, the lowest in over 4 years. Thus, the United States remains very competitive in Western Hemisphere and European markets. U.S. domestic and residual use is projected at a record 108 million cwt (rough) in 1994/95, up 10 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). 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 356.3 million tons for 1994/95 (versus 353.3 in 1993/94) including larger foreign production of 349.8 million tons (versus 348.1) 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 million tons. Strong growth in demand from traditional rice markets nearly offsets the expected reduction in Japan's imports from 2.5 million tons in 1994 to only 0.3 million in 1995. MONTH-TO-MONTH HIGHLIGHTS USDA lowered its April forecast for the 1994/95 season average price to $6.50- 6.80 per cwt, down from $6.50-7.00 in March, based on reported prices through the first 8 months of the crop year, plus the larger than expected planting intentions estimate. USDA's National Agricultural Statistics Service (NASS) reported March's U.S. average farm price at a preliminary $6.60 per cwt. NASS also revised the February estimate to $6.71, up slightly from an initial estimate of $6.68. USDA lowered its April projection for 1994/95 U.S. exports (rough basis) to 83 million cwt, down from 89 million cwt in March. This change is due to an increase in the share of rough rice exports and the milling rate, leading to an overall reduction in the rough rice export projection. As a result of the revision in projected exports, the domestic use and residual category was raised to 108.2 million cwt, up from 102.0 million. This revision leaves projected ending stocks at 40.3 million cwt, down only slightly from 40.8 million in March. ****************************************************************************** * 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 May 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 1: U.S. rice planting intentions, by State, by class, were reported in NASS' Prospective Plantings report released March 31. The State breakout is presented in table 6. NOTE 2: Printed copies of the 1995 Rice Yearbook will be released in November to all ERS/NASS subscribers to the former Rice Situation and Outlook. 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: Intended and actual Table 1- U.S. rice supply and use, 1989/90 to present 1/ ============================================================================== | | 1994/95 1995/96 Item | 1989/90 1990/91 1991/92 1992/93 1993/94 | 2/ 2/ ============================================================================== | | TOTAL RICE | Percent | ARP 3/ | 25 20 5 0 5 | 0 5 | | Area | Million acres | Planted | 2.731 2.897 2.884 3.176 2.920 | 3.353 Harvested | 2.687 2.823 2.781 3.132 2.833 | 3.316 | | | Pounds per harvested acre | Yield | 5,749 5,529 5,731 5,736 5,510 | 5,964 | | | Million hundredweight | Beg. Stocks | 26.7 26.3 24.6 27.4 39.4 | 25.8 Production | 154.5 156.1 159.4 179.7 156.1 | 197.8 Imports | 4.4 4.8 5.3 6.1 6.9 | 8.0 Total Supply| 185.6 187.2 189.2 213.2 202.5 | 231.5 | | Domestic Use | | & Residual 4/| 82.2 91.6 95.4 96.7 98.3 | 108.2 | | Exports | 77.1 71.0 66.4 77.1 78.4 | 83.0 Total Use | 159.3 162.6 161.8 173.7 176.7 | 191.2 | | End. Stocks | 26.3 24.6 27.4 39.4 25.8 | 40.3 CCC inv. | 0.0 0.1 0.4 0.1 0.0 | 0.1 Free Stocks | 26.3 24.5 27.0 39.3 25.8 | 40.2 | | | Percent | Stocks-use | 16.5 15.1 16.9 22.7 14.6 | 21.1 | | Average Farm | $/cwt | Price 5/ | 7.35 6.68 7.58 5.89 7.98 | 6.50-6.80 | | Average | | Milling Rate | 72.6 72.0 70.5 70.0 74.0 | 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, 1992/93 to present ============================================================================== | 1992/93 1993/94 1994/95 | ------------------- ------------------- --------------------- Month | $/cwt 1,000 cwt $/cwt 1,000 cwt $/cwt 1,000 cwt ============================================================================== Aug | 6.60 10,274 5.19 12,411 6.75 11,499 Sep | 6.41 12,496 5.21 12,950 6.69 12,606 Oct | 6.40 14,012 6.10 14,804 6.47 13,381 Nov | 6.42 10,844 8.06 15,228 6.53 15,548 Dec | 6.39 12,926 8.91 12,722 6.56 17,479 Jan | 6.36 13,228 8.98 14,106 6.78 17,781 Feb | 6.06 12,940 10.10 9,750 6.71 16,050 Mar | 5.64 13,197 10.20 11,594 6.60 1/ Apr | 5.52 11,274 9.93 8,113 May | 5.24 11,335 10.00 7,854 Jun | 5.02 12,551 8.88 8,708 Jul | 4.92 14,062 7.80 7,986 | Average 2/ | 5.89 12,428 8.09 11,352 6.64 14,906 Total 3/ | 149,139 136,226 6.50-6.80 104,344 ============================================================================== 1/ March price is a preliminary mid-month price estimate. 2/ Price is marketing year weighted average; 1994/95 is for August-March. 3/ Total volume marketed. 1994/95 price range is a USDA projection. Table 3- USDA calculated world market rice prices, 1992/93 to present ============================================================================= | 1992/93 1993/94 1994/95 3/ Month 2/ | -------------------- -------------------- -------------------- | Long Medium Short Long Medium Short Long Medium Short ============================================================================= | $/cwt Aug | 5.91 5.45 5.43 4.11 3.76 3.57 5.33 5.64 5.33 Sep | 5.70 5.24 5.22 4.20 3.84 3.65 5.62 5.67 5.36 Oct | 5.53 5.05 5.02 4.88 4.48 4.26 5.72 5.61 5.32 Nov | 5.48 5.00 4.97 6.56 6.15 5.86 5.79 5.59 5.31 Dec | 5.36 4.92 4.89 7.26 6.85 6.53 5.81 5.57 5.30 Jan | 5.29 4.82 4.79 7.35 7.00 6.73 6.12 5.59 5.36 Feb | 5.23 4.72 4.69 7.49 7.31 7.20 6.32 5.67 5.44 Mar | 4.98 4.45 4.43 7.29 7.30 7.18 6.32 5.71 5.48 Apr | 4.63 4.20 4.17 6.48 7.25 7.11 6.32 5.71 5.48 May | 4.38 3.97 3.95 5.91 7.19 7.03 Jun | 4.25 3.83 3.80 5.32 7.05 6.87 Jul | 4.25 3.83 3.80 5.22 6.27 6.12 | Average 2/ | 5.08 4.62 4.60 6.00 6.20 6.01 5.93 5.64 5.37 ============================================================================= 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/ April is preliminary. The 1994/95 average is for August-April. Table 4- U.S. exports and sales commitments, 1992/93 to present 1/ ============================================================================== | | 1993/94 |1994/95 Country |1988/89 1989/90 1990/91 1991/92 1992/93 |----------------|-------- or | | as of | as of Region | Final Final Final Final Final | Final 03/30/94|03/30/95 ============================================================================== | 1,000 metric tons | | Eur. Union | 442 359 383 263 362 | 327 309 | 377 Oth W Eur. | 71 40 46 44 47 | 54 16 | 20 Turkey | 98 138 153 154 191 | 67 67 | 210 East Eur. | 18 20 30 39 46 | 10 10 | 40 FSU | 0 0 0 42 15 | 4 3 | 22 | | | Japan | 0 0 0 0 0 | 568 372 | 1 Iran | 0 0 0 7 130 | 121 151 | 136 Iraq | 434 299 0 0 0 | 0 0 | 0 S. Arabia | 162 145 180 146 205 | 157 170 | 125 Oth Asia/ME| 229 169 124 75 103 | 71 64 | 140 | | | Cote d'Iv. | 16 35 78 56 92 | 67 69 | 41 Senegal | 64 57 62 37 87 | 75 61 | 26 RSA | 64 103 87 103 111 | 90 100 | 109 Oth Africa | 124 104 89 47 25 | 26 25 | 31 | | | Canada | 95 96 109 88 98 | 91 83 | 106 Mexico | 58 198 87 118 249 | 177 137 | 180 Haiti | 1 17 34 97 117 | 43 27 | 72 Jamaica | 66 68 74 56 30 | 63 46 | 43 Brazil | 0 0 295 187 0 | 12 12 | 367 Peru | 27 161 25 42 34 | 3 3 | 72 Oth W Hem. | 247 116 155 184 134 | 125 93 | 335 | | | Total | 2,248 2,137 2,009 1,783 2,075 | 2,149 1,816 | 2,493 ------------------------------------------------------------------------------ Census 2/ | 2,786 2,532 2,300 2,113 2,443 | 2,523 |2,947 4/ Diff. 3/ | 538 396 291 329 367 | 373 | 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. 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 | U.S. 2/ Bangkok, Long Grain 4/ or | ------------------------- --------------------------------------- Marketing | LG 3/ MG 3/ Parboiled 100% 5% Par- 15% 35% A.1 5/ Year 1/ | Houston Calif. Houston Grade B boiled Broken Broken Special ============================================================================== | $/metric ton 6/ 1986/87 | 240 282 311 190 171 173 154 122 1987/88 | 421 366 486 273 261 256 236 204 1988/89 | 324 361 386 292 284 275 256 232 1989/90 | 342 352 400 292 259 262 214 172 1990/91 | 331 347 400 296 277 261 213 169 1991/92 | 368 384 418 287 263 258 222 184 1992/93 | 322 383 349 244 227 217 193 163 | Aug '93 | 287 342 331 218 214 196 179 156 Sep '93 | 287 342 331 216 213 192 177 158 Oct '93 | 338 342 375 272 222 237 207 162 Nov '93 | 505 408 536 337 264 288 242 167 Dec '93 | 551 485 573 330 272 281 234 156 Jan '94 | 551 485 595 376 272 305 241 151 Feb '94 | 551 485 595 390 266 313 238 155 Mar '94 | 546 485 579 330 248 240 207 155 Apr '94 | 496 507 540 331 238 242 205 157 May '94 | 423 540 472 259 235 213 190 160 Jun '94 | 386 507 444 232 228 200 186 165 Jul '94 | 342 480 394 237 251 211 197 178 1993/94 | 439 451 480 294 244 243 208 160 | Aug '94 | 313 428 353 259 271 237 222 200 Sep '94 | 309 397 344 267 265 246 233 210 Oct '94 | 304 397 331 272 262 249 238 216 Nov '94 | 298 397 331 272 263 249 236 215 Dec '94 | 298 397 331 270 259 250 237 222 Jan '95 | 298 366 331 282 264 265 252 232 Feb '95 | 298 358 342 289 266 270 255 226 Mar '95 | 298 353 342 292 269 272 253 222 Apr '95 7/| 0 0 0 0 0 0 0 0 ============================================================================== 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/ Bagged, f.o.b. mills. 7/ Preliminary data. Table 6- State and U.S. rice acreage: Intended and actual =============================================================== 1994 1994 1995 Planting Actual Planting Change State intentions plantings intentions from 1994 =============================================================== ------- 1,000 acres ------- Percent Long grain: Arkansas 1,156 1,218 1130 -7.2 California 10 7 8 14.3 Louisiana 410 400 410 2.5 Mississippi 280 315 290 -7.9 Missouri 130 130 103 -20.8 Texas 320 340 336 -1.2 United States 2,306 2,410 2,277 -5.5 Medium grain: Arkansas 240 220 218 -0.9 California 493 470 442 -6.0 Louisiana 225 225 180 -20.0 Missouri -- 1 2 100.0 Texas 10 15 4 -73.3 United States 968 931 846 -9.1 Short grain: Arkansas 4 2 2 0.0 California 12 10 10 0.0 United States 16 12 12 0.0 Total: Arkansas 1,400 1,440 1,350 -6.3 California 515 487 460 -5.5 Louisiana 635 625 590 -5.6 Mississippi 280 315 290 -7.9 Missouri 130 131 105 -19.8 Texas 330 355 340 -4.2 United States 3,290 3,353 3,135 -6.5 =============================================================== Source: USDA, NASS Prospective Plantings and Acreage report. 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