HDR101180020150mmdd951600 RICE OUTLOOK November 13, 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--1195. ----------------------------------------------------------------------------- HIGHLIGHTS: o USDA forecasts the 1995 U.S. rice crop at 174.2 million cwt (rough), down 3.4 million cwt from last month's forecast, and down 24 percent from last year's record 197.8 million cwt. o USDA forecasts 1995/96 U.S. rice ending stocks at 23.7 million cwt (rough), down 24 percent from a year earlier. o Near-term import demand has slowed during September-October as most major buyers are awaiting the Asian harvests and their anticipated weaker prices. o International rice prices, supported through the summer and fall by large Asian demand and tight international supplies, are projected to weaken by early 1996 as the outlook for good harvests in Asia is expected to reduce demand and increase exportable supplies. o USDA has left its projected range for the 1995/96 season average farm price unchanged at $7.00 to 8.00 per cwt. o USDA revised upward (for the seventh consecutive month) its estimate of 1995 rice trade to a record 19.5 million tons on the strength of continued strong buying by Indonesia. o World trade is projected sharply lower in 1996 at 16.2 million tons as Bangladesh, China, Indonesia, Iran, and North Korea significantly reduce import volume. o A major uncertainty for 1996 world trade is China. A significant importer in 1995, China is projected to harvest a large 1995 crop, reducing import needs for 1996. Internal production and marketing changes make it unlikely that China will resume traditional large exports of low-quality long grain. China's import demand for high-quality long grain is more uncertain. USDA projects China's 1996 imports down significantly, but still important, at 1.0 million tons. NEAR-TERM PRICE OUTLOOK STEADY TO LOWER Continued strong world import demand, tight international long-grain supplies and high prices, and diminished U.S. crop prospects are expected to continue to support U.S. long-grain export and farm prices through the end of 1995. However, the prospect of good Asian harvests should prevent any further significant price gains. The 1995/96 season average farm price is forecast at $7.00 to 8.00 per cwt, compared with 1994/95's $6.74. USDA's National Agricultural Statistics Service (NASS) reported October's average monthly farm price at a preliminary $8.38 per cwt. NASS also revised the September estimate to $7.92, up from a preliminary estimate of $7.70. U.S. f.o.b., No. 2, 4-percent broken (high-quality long-grain) offer quotes out of Houston climbed to $441 in early November, up from an average of $432 per ton in October. Similar type and quality Thai rice (100 percent, grade B) f.o.b. offer quotes out of Bangkok began to weaken falling to $362 per ton, down from an average of $392 in October. The recent strength in U.S. export prices and the weakness in Thai prices have pushed the high-quality long-grain price premium of U.S. rice over Thai rice to $79 per ton, the largest since July 1994. Traditionally, U.S. rice is thought to be competitive in international markets with a premium of $30-50 over Thai rice. The widening premium will likely weaken interest in U.S. rice from price-sensitive markets. LONG-TERM PRICE OUTLOOK WEAKER Internationally traded rice prices are projected to weaken substantially in 1996, as good harvests in most Asian producing countries are projected to weaken demand while increasing export competition. World trade is projected sharply lower in 1996 at 16.2 million tons as Bangladesh, China, Indonesia, Iran, and North Korea significantly reduce import volume. Burma, Pakistan, and Thailand harvest their main-season rice crops during October-December. Thai rice competes in all classes of rice markets: high-, intermediate-, and low-quality. Burma competes almost entirely in the lower- quality markets (25-percent or higher brokens). Pakistan exports both high- quality basmati aromatic rice as well as medium- to lower-quality nonaromatic rice. The timing of the projected price weakening may hinge on China's import demand response to Vietnam's December-January harvest of its 10th month crop. In 1995, China's huge import demand captured nearly the entire Vietnamese crop, leaving the international market short of intermediate- and low-quality rice supplies. This action sustained international prices into the summer and left Indonesia hurrying to find alternate sources of supply. USDA projects China's import demand substantially lower for 1996, diminishing the likelihood that China will again monopolize Vietnamese rice exports. As a result, some Vietnamese rice is expected to enter international markets in early 1996, adding to growing pressure on international prices. Thailand is projected to produce a record second crop (harvested in May-June) in 1996, further pressuring international prices. Thailand's second crop is entirely irrigated and destined principally for export markets. WORLD TRADE IN 1995 World import demand is projected up 22 percent to a record 19.5 million tons in 1995. Import demand in 1995 is led by Indonesia with projected record imports of 2.8 million tons (revised up from 2.6 million tons last month), followed closely by China at a projected record 1.8 million tons. Other major importers include Bangladesh and Iran, each with projected imports of 1.4 million tons. Projected imports by North Korea of 950,000 tons (500,000 tons from Japan), add to 1995's record demand. Saudi Arabia and Brazil represent strong steady markets with projected imports of 750,000 and 700,000 tons, respectively. India is projected to export 3.5 million tons of rice in 1995, more than five times its 1994 volume, and easily surpassing the previous record of 919,000 tons exported in 1980. If realized, India's 1995 export volume of 3.5 million tons would be the largest rice exports ever by any country other than Thailand. The dramatic rise is projected to push India into second place as an exporter, ahead of the United States wiht 3.0 million tons. Thailand is projected to be the largest exporter in 1995 with 5.5 million tons, the most since a record 6.0 million in 1989. Most of India's rice exports are low-quality that do not compete directly with U.S. exports. However, the tremendous jump in export volume has had important implications for the international market structure. Without enormous quantities of Indian rice pouring into the international market in 1995 to fill a void left by China, Thailand, and Vietnam, international prices would have climbed significantly higher. (Look for a special article on India's rice export situation in the forthcoming Rice Situation and Outlook Yearbook released in late November.) Vietnam is projected to export 2.0 million tons in 1995, matching 1994's estimated record. However, China monopolized Vietnam's exportable surplus in 1995, limiting availability to non-Chinese destinations. Pakistan is projected to export a record 1.4 million tons in 1995. Finally, Burma is expected to export 900,000 tons (largest in 20 years, but revised down 200,000 tons from last month) on the strength of rising production. The top six exporting countries account for over 16 million tons or 84 percent of world rice exports. INTERNATIONAL TRADE AND PRODUCTION OUTLOOK FOR 1995/96 Total 1995/96 world production (milled basis) is projected at 358.0 million tons, down 2.2 million from last year's record. Global consumption is projected at a record 364.5 million tons, exceeding projected production and causing global stocks to decline 6.5 million tons to 42.0 million. Early projections for 1996 world trade are at 16.2 million tons, down more than 17 percent from 1995's record. Bangladesh, China, Indonesia, Iran, and North Korea account for the decrease as their combined 1996 imports are projected to decline to only 3.7 million tons from 8.4 million in 1995. Despite the projected decline, world trade is still projected at its second highest level while world stocks are projected at their tightest since 1976/77. This tight supply situation suggests that international prices continue to be very sensitive to any production shortfall from a major exporting or consuming nation. Thailand's main-season output is projected at 11.6 million tons (milled), down 3 percent from 1994's record due to August-September flooding but still above the previous 8-year average of 11.2 million tons. Minimal 1994/95 ending stocks in Thailand, estimated at 410,000 tons, and a reduced U.S. crop may keep high-quality stocks fairly tight until Thailand's second crop is harvested in May. Thailand's total rice crop for 1995/96 is projected down less than 2 percent as current high market prices are expected to stimulate expanded area and near-record production for the second crop (planted in January-February, harvested in May-June). USDA projects India will produce a 1995/96 crop of 79 million tons (milled). Although down from last year's record 81.3 million, the crop would still add to India's grain surplus and permit large exports in 1996. Bangladesh is projected to produce 18 million tons in 1995/96, up sharply from last year's poor harvest of only 16.6 million tons. The increased production is expected to reduce Bangladesh's import needs to only 150,000 tons in 1996. China's projected 1995 rice crop is revised upward to 125.0 million tons based on recent government reports that point to a larger total grain harvest than previously projected. In 1994 China produced 123.2 million tons on 30.2 million hectares. The 1995 crop is expected to reverse a 2-year trend of declining area and production. However, it is not yet clear whether this signals an increased internal production response to high domestic prices with lower future import needs. China's rice import demand is projected at 1.0 million tons in 1996 (down 500,000 tons from last month). In Southeast Asia, planting and rainfall were normal through August for most producing countries. Record production is projected for Burma, the Philippines, and Vietnam on the strength of expanded area. Tropical storm Angela appears to have inflicted only minor damage to the 1995 rice crop in the Philippines. Significant variability in the timing of rainfall has hurt rain-fed crops in Indonesia and contributed to a projected third consecutive year of declining production. Domestic supplies are expected to fall significantly short of demand, preserving the need for large imports in 1996 (projected at 1.5 million tons). Indonesia's 1995 rice crop is projected at 29.9 million tons, compared with a drought-reduced 30.3 million in 1994, and the record of 31.4 million in 1992. Indonesia's large and rapidly growing population (with an annual per capita rice consumption of 161 kilograms) ensures that any production shortfall will be translated into imports. U.S. SITUATION AND OUTLOOK: 1995/96 Marketing Year Production Forecast Down Based on conditions in early November, USDA forecasts the 1995 U.S. rice crop at 174.2 million cwt, down 2 percent from the October crop estimate, and down 24 percent from 1994's record 197.8 million. National average yields are forecast at 5,635 pounds per acre, 5.5 percent below last year's record. Rice plantings are currently forecast at 3.120 million acres, down from the June 30 Acreage report estimate of 3.165 million, and down 7 percent from 1994. A 5-percent acreage reduction program and lower farm prices in 1994/95 are responsible for the reduced 1995 planting estimate. U.S. rice production prospects diminished significantly during August due to prolonged, high temperatures covering most of the Gulf coast and Delta growing regions. This resulted in less than optimal conditions for head filling, and led to reductions in yields across the affected regions. California also experienced less than ideal conditions as an exceptionally cool, wet spring weather delayed plantings and led to a slow start. Unfavorable growing conditions persisted in California through much of the summer. Rice harvesting is essentially finished in all of the major producing States. A breakdown of 1995 U.S. rice production by type suggests an 8-percent decrease in long grain production to 122.2 million cwt and a 19-percent decrease in short and medium grain production to 52.1 million cwt (table 5). U.S. rice exports in 1995/96 are forecast at 86 million cwt based on projected available U.S. supplies, continued strong international demand, and a competitive U.S. price. Latin America, the Middle East, and Europe are expected to remain important markets for U.S. rice. Rough rice exports are expected to decline to 8 million cwt, compared with 18.5 million last year as strong international demand and limited U.S. supplies place a premium on domestic milling. Lower production and continued strong exports are expected to reduce 1995/96 U.S. rice ending stocks to a tight 23.7 million cwt (rough), down 24 percent from a year earlier. This represents 12.5 percent of total use, the lowest since 1980/81. Smaller long grain production is expected to be partially offset by a 19- percent reduction in exports. However, sharply higher domestic demand is expected to lower long-grain ending stocks to 13.3 million cwt or 10.2 percent of use. Medium grain exports are projected up only marginally at 20 million cwt. This projection is bolstered by expected Japanese purchases under the minimum access requirement of the World Trade Organization. Record domestic use is expected to significantly lower ending stocks to 9.7 million cwt, or 16.4 percent of use. ****************************************************************************** * INFORMATION CONTACTS AT THE ECONOMIC RESEARCH SERVICE: * * * * Randall D. Schnepf, international and domestic (202) 501-8513 * * * * Next month's Rice Outlook will be available on December 13, 1995. * ****************************************************************************** Notes: Printed copies of the 1995 Rice Yearbook released in late November are now available to all ERS/NASS subscribers to the former Rice Situation and Outlook. For information, call: (800) 999-6779; for areas outside of the United States or Canada use (703) 834-0125. Tables: Table 1- U.S. rice supply and use, 1989/90 to present Table 2- U.S. monthly average farm prices and marketings, 1993/94 to present Table 3- USDA calculated world market rice prices, 1993/94 to present Table 4- U.S. and Thailand f.o.b. export prices, 1986/87 to present Table 5- U.S. rice supply and use, by type, 1989/90 to 1995/96. Table 1- U.S. rice supply and use, 1989/90 to present 1/ | | 1995/96 Item | 1989/90 1990/91 1991/92 1992/93 1993/94 | 1994/95 2/ | | TOTAL RICE | Percent | ARP | 25 20 5 0 5 | 0 5 | | Area | Million acres | Planted | 2.731 2.897 2.884 3.176 2.920 | 3.353 3.120 Harvested | 2.687 2.823 2.781 3.132 2.833 | 3.316 3.092 | | | Pounds per harvested acre | Yield | 5,749 5,529 5,731 5,736 5,510 | 5,964 5,635 | | | Million hundredweight | Beg. stocks | 26.7 26.3 24.6 27.4 39.4 | 25.8 31.4 Production | 154.5 156.1 159.4 179.7 156.1 | 197.8 174.2 Imports | 4.4 4.8 5.3 6.1 6.9 | 7.3 8.3 Total supply| 185.6 187.2 189.2 213.2 202.5 | 230.9 213.9 | | Food | 60.2 63.7 67.1 69.0 71.2 | 74.0 77.0 Seed | 3.6 3.6 3.9 3.6 4.2 | 4.1 4.1 Brewer's use | 15.4 15.3 15.4 15.1 15.1 | 15.1 15.1 Residual 3/ | 3.0 9.0 9.0 9.0 11.0 | 5.4 8.0 Domestic use| 82.2 91.6 95.4 96.7 101.5 | 98.6 104.2 | | Exports | 77.1 71.0 66.4 77.0 75.2 | 100.9 86.0 Rough | 4.8 6.3 5.1 3.6 | 18.5 8.0 Mld(rgh eq)| 66.2 60.1 71.9 71.5 | 82.4 78.0 Total use | 159.3 162.6 161.8 173.7 176.7 | 199.5 190.2 | | End. stocks | 26.3 24.6 27.4 39.4 25.8 | 31.4 23.7 CCC inv. | 0.0 0.1 0.4 0.1 0.0 | 0.1 0.0 Free stocks | 26.3 24.5 27.0 39.3 25.8 | 31.3 23.7 | | | Percent | Stocks-use | 16.5 15.1 16.9 22.7 14.6 | 15.7 12.5 | | Average farm | $/cwt | 7.00 price 4/ | 7.35 6.68 7.58 5.89 7.98 | 6.74 -8.00 | | Average | Percent | milling rate | 72.6 72.0 70.5 70.0 74.0 | 73.0 72.0 1/ Marketing year (August 1 to July 31); rough equivalent of rough and milled rice. 2/ Projected. 3/ Residual: unreported use, processing losses, and estimating errors. 4/ Marketing year weighted average price received. Table 2- U.S. monthly average farm prices and marketings, rough equivalent, 1993/94 to present | 1995/96 1994/95 1993/94 | -------------------- ------------------- ------------------- Month | $/cwt 1,000 cwt $/cwt 1,000 cwt $/cwt 1,000 cwt Aug | 7.64 9,935 6.87 11,534 5.19 12,411 Sep | 7.92 1/ 11,898 6.89 12,610 5.21 12,950 Oct | 8.38 1/ 10,917 6.47 13,381 6.10 14,804 Nov | 6.53 15,470 8.06 15,228 Dec | 6.56 17,479 8.91 12,722 Jan | 6.78 17,781 8.98 14,106 Feb | 6.71 16,050 10.10 9,750 Mar | 6.64 17,565 10.20 11,594 Apr | 6.70 12,425 9.93 8,113 May | 6.75 16,848 10.00 7,854 Jun | 7.03 13,793 8.88 8,708 Jul | 7.17 9,847 7.80 7,986 | Average 2/ | 7.99 10,917 6.74 14,565 7.98 11,352 Total 3/ | 7.00-8.00 4/ 174,783 136,226 1/ Preliminary midmonth price estimate. 2/ Price is marketing year weighted average; 1995/96 is for August to current month. 3/ Total volume marketed. 4/ 1995/96 price range is a USDA projection. Table 3- USDA calculated world market rice prices, 1992/93 to present 1/ | 1995/96 1994/95 1993/94 Month 2/| -------------------- -------------------- -------------------- | Long Medium Short Long Medium Short Long Medium Short | $/cwt Aug | 7.93 6.22 6.06 5.33 5.64 5.33 4.11 3.76 3.57 Sep | 8.02 6.30 6.13 5.62 5.67 5.36 4.20 3.84 3.65 Oct | 8.81 6.67 6.51 5.74 5.61 5.32 4.88 4.48 4.26 Nov 3/| 8.87 6.69 6.53 5.85 5.59 5.31 6.56 6.15 5.86 Dec | 5.82 5.59 5.31 7.26 6.85 6.53 Jan | 6.21 5.62 5.58 7.35 7.00 6.73 Feb | 6.41 5.70 5.66 7.49 7.31 7.20 Mar | 6.41 5.74 5.70 7.29 7.30 7.18 Apr | 6.41 5.74 5.70 6.48 7.25 7.11 May | 6.56 5.87 5.82 5.91 7.19 7.03 Jun | 7.38 6.03 6.00 5.32 7.05 6.87 Jul | 7.63 6.10 6.06 5.22 6.27 6.12 | Average 2/| 8.41 6.47 6.31 6.28 5.74 5.59 6.00 6.20 6.01 1/ Loan rate basis (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/ Preliminary. The 1995/96 average is for August to current month. Table 4- U.S. and Thailand f.o.b. export prices, 1986/87 to present Month | U.S. 2/ Bangkok, long grain 5/ or | ------------------------- --------------------------------------- marketing | LG 3/ MG 4/ Parboiled 100% 5% par- 15% 35% A.1 6/ year 1/ | Houston Calif. Houston grade B boiled broken broken special | $/metric ton 7/ 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 | 298 353 342 290 269 271 254 226 May '95 | 311 353 346 299 274 279 262 239 Jun '95 | 358 353 380 333 305 314 397 276 Jul '95 | 392 353 406 353 341 335 321 297 1994/95 | 314 375 348 290 276 270 263 232 | Aug '95 | 386 364 419 346 343 327 310 288 Sep '95 | 386 380 424 363 351 342 318 284 Oct '95 | 432 432 481 392 372 370 339 293 Nov '95 8/| 441 441 463 362 349 342 320 294 NA = Not available. 1/ Simple average of weekly price quotes. 2/ Lowest quote offered. 3/ Number 2, 4 percent. 4/ Number 1, 4 percent. 5/ Nominal price quotes collected by the U.S. embassy, Bangkok. 6/ 100 percent broken. 7/ Bagged, f.o.b. mills. 8/ Preliminary data. Table 5- U.S. rice supply and use, by type, 1989/90 to 1994/95 1/ | | 1995/96 Item | 1989/90 1990/91 1991/92 1992/93 1993/94 | 1994/95 2/ LONG-GRAIN | | | Million acres | Planted | 2.031 2.129 2.113 2.408 2.102 | 2.410 2.373 Harvested | 1.998 2.065 2.023 2.372 2.028 | 2.379 2.328 | Pounds per harvested acre | Yield | 5,464 5,221 5,395 5,397 5,082 | 5,609 5,248 | Million hundredweight | Beg. stocks | 15.4 13.2 11.5 13.0 21.6 | 15.1 14.5 Production | 109.2 107.8 109.1 128.0 103.1 | 133.4 122.2 Imports | 4.0 4.3 4.7 5.4 6.2 | 6.8 7.7 Total supply| 128.6 125.3 125.4 146.4 130.9 | 155.3 144.3 | | Dom. use 3/ | 54.5 57.8 61.4 60.8 67.2 | 59.8 65.0 Exports | 60.8 56.0 51.0 64.0 48.6 | 81.0 66.0 Total use | 115.3 113.8 112.4 124.8 115.8 | 140.8 131.0 | | End. stocks | 13.2 11.5 13.0 21.6 15.1 | 14.5 13.3 | Percent | Stocks-use | 11.5 10.1 11.6 17.3 13.0 | 10.3 10.2 ------------------------------------------------------------------------------ MEDIUM & SHORT-GRAIN | | Million acres | Planted | 0.700 0.768 0.771 0.768 0.818 | 0.943 0.747 Harvested | 0.689 0.758 0.758 0.760 0.805 | 0.937 0.764 | Pounds per harvested acre | Yield | 6,579 6,370 6,627 6,795 6,590 | 6,866 6,813 | Million hundredweight | Beg. stocks | 9.0 11.6 11.7 12.9 15.8 | 10.0 15.8 Production | 45.3 48.3 50.2 51.6 53.0 | 64.3 52.1 Imports | 0.4 0.5 0.6 0.7 0.7 | 0.5 0.6 Total supply| 55.6 60.5 62.4 64.8 70.9 | 74.5 68.9 | | Dom. use 3/ | 27.7 33.8 34.0 35.9 34.3 | 38.7 39.2 Exports | 16.3 15.0 15.4 13.0 26.6 | 19.9 20.0 Total use | 44.0 48.8 49.4 48.9 60.9 | 58.6 59.2 | | End. stocks | 11.6 11.7 12.9 15.8 10.0 | 15.8 9.7 | Percent | Stocks-use | 26.5 24.0 26.1 32.4 16.4 | 27.0 16.4 ------------------------------------------------------------------------------ End. stocks | | difference 1/| 2.4 1.4 1.4 2.0 0.7 | 1.1 0.7 1 / Stock totals by type omit brokens, screenings, and brewer's. These are included in the totals for all types in table 1. 2/ Projected. 3/ Includes residual. End end end