RICE OUTLOOK February 12, 1996 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- RICE OUTLOOK is published monthly by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. RCS-0296. ----------------------------------------------------------------------------- MONTHLY HIGHLIGHTS: o USDA has raised its projected range for the 1995/96 season average farm price by $0.25 at $8.25 to 9.25 per cwt because of higher-than-expected domestic prices through the first 6 months of the marketing year and continued strong international prices. o World trade for 1996 is projected at 17.5 million tons, up 0.2 million tons from last month on larger import projections for Bangladesh and the Philippines. NEAR-TERM PRICE OUTLOOK: UNCERTAIN ON U.S. FARM BILL OUTCOME The 1995/96 season average farm price (SAFP) is forecast at $8.25 to 9.25 per cwt, up substantially from 1994/95's $6.78. Continued strong world import demand, tight international long-grain supplies (particularly high-quality long grain) and high prices, and a small 1995 U.S. crop continue to support U.S. long-grain export and farm prices. Strong buying by the Philippines and Iran are supporting Asian rice prices despite good harvests throughout Asia. In addition, higher-than-expected domestic prices early in the marketing year influenced the upward revision of 1995/96's SAFP estimated range. Through the first 6 months of the crop year, the U.S. monthly farm price has averaged an estimated $8.73 per cwt. In February USDA estimated January's mid-month farm price at $9.27 per cwt. In addition, the December estimate was revised to $9.36, from a preliminary $9.25. Farm prices must average about $8.77 for the remainder of the marketing year for the SAFP to equal the midpoint ($8.75) of the projected range. Considerable uncertainty persists surrounding the outcome of the U.S. farm program legislation. To date, Congress has not passed any new farm program legislation for the 1996 rice crop. On one hand, the possibility of an extension of existing legislation would likely produce larger planted rice acreage and production, and significantly lower prices in 1996. On the other hand, potentially declining benefits under proposed farm program legislation could result in declining 1996 acreage and production, and higher domestic prices. U.S. f.o.b., No. 2, 4-percent broken (high-quality long-grain) offer quotes out of Houston have declined to $408 per ton in early February, down from an average of $441 in November. Similar type and quality Thai rice (100 percent, grade B) f.o.b. offer quotes out of Bangkok strengthened to $378 per ton, up from an average of $347 in December. The recent weakness in U.S. export prices and the strength in Thai prices have tightened the high-quality long- grain price premium of U.S. rice over Thai rice to $30 per ton, down from $72 in December and $87 in November. Traditionally, U.S. rice is thought to be competitive in international markets with a premium of $30-50 over Thai rice. U.S. medium grain prices (No. 1, 4-percent broken, f.o.b. California) have climbed to a premium of $99 per ton over U.S. long grain (No. 2, 4-percent broken, f.o.b. Gulf port) in early February due, in part, to strong 1995 Japanese purchases and prospects for similar Japanese buying in 1996. LONG-TERM PRICE OUTLOOK: STEADY TO WEAKER International rice prices, supported through the summer and fall by large Asian demand and tight international supplies, are projected to weaken in 1996 as the outlook for good harvests in Asia is expected to reduce demand and increase exportable supplies. However, the timing of the expected price weakness remains less clear. Lower-quality prices have already shown some weakeness as A.1 Special (100 percent broken), f.o.b. Bangkok, price quotes have fallen to $256 per ton in early February, down from $296 in November. The November price was the highest recorded for A.1 Special in the 10 years of available data. However, strong demand from the Philippines and Bangladesh, and continued Indonesian buying have temporarily abated the decline in lower-quality prices. Minimal 1994/95 ending stocks in Thailand and a reduced U.S. crop have kept high-quality stocks fairly tight entering 1996, despite an estimated near- record Thai main-season harvest in November. As a result, the high-quality price premium measured by the difference between Bangkok's f.o.b price quotes for 100-percent grade B and A.1 Special has risen to $122 per ton. In 1994/95 the high-quality price premium averaged $58 per ton. The next major factor that could contribute to the expected market weakeness (particularly the high-quality market) involves the development of Thailand's off-season rice crop (harvested in May-June). Thailand is projected to produce a record second crop in 1996. Thailand's second crop is entirely irrigated and destined principally for export markets. INTERNATIONAL TRADE AND PRODUCTION OUTLOOK FOR 1995/96 The 1995/96 world rice supply and demand projections are virtually unchanged from last month. Total production (milled basis) is projected at a record 367.7 million tons, 6.8 million above last year's record. Projected world consumption of 367.5 million tons is only slightly above last year; exports in 1996 are projected to fall. Larger production pushes global ending stocks to a projected 47.9 million tons, just over last year. Most of the monthly change in global supply and use is in Burma, Pakistan, and India. India's 1995/96 projected rice production remains unchanged at 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 again in 1996. India's 1996 rice export projection was revised up 500,000 tons this month to 2.5 million tons, based on the heavy shipment pace and available supplies. But 1996 exports are projected down sharply from last year's record 4 million. As a result, India is expected to drop from the second to the third largest world rice exporter, behind Thailand and the United States. With higher outturn expected, Pakistan's projected 1996 exports also were increased to 1.4 million tons, but remain below its 1995 record exports of 1.5 million. Burma's expected 1996 exports were reduced to 700,000 tons (from 800,000 tons last month) compared with 645,000 in 1995. Burma planted substantially larger area to its main, wet season crop in 1995/96. But also in an effort to increase area of the second, dry season crop, the Ministry of Agriculture mandated wet season planting occur 1 month earlier than normal. Some of the main crop was lost as a result of the new planting schedule, but apparently not as much as was earlier thought. And the second crop, which is about to be harvested, progresses well. Outturn for 1995/96 is projected at 10 million tons (milled), 7.5 percent more than in 1994/95. With domestic consumption expected up, the government will be more cautious about exporting in 1996. Internal demand and outstanding 1995 export commitments of about 700,000 tons will be filled before additional exports occur. Despite slightly less rice area in Pakistan in 1995/96, as farmers in some areas shifted to better-priced cotton, conditions appear to have been favorable and rice production is estimated 350,000 tons above last year at 3.8 million tons (milled). But 1995/96 ending stocks are expected to be drawn down record domestic consumption projected at 2.5 million tons (generated by population growth and rising incomes) and continued strong 1996 exports. World trade in 1996 is projected at 17.6 million tons, fractionally above last month, but down 13 percent from and second to the 1995 record, as Bangladesh, China, and Iran significantly reduce imports. Aside from changes in exports, the month-to-month change in world trade reflects larger Philippine imports of 1 million tons (up from 0.7 million) and Bangladesh's imports at 500,000 tons (up from 150,000 tons). The Philippines' imports reflect the government's efforts to control a crisis of rising food prices and inflation. Last summer's typhoons did not significantly damage either of the two rice crops and production is projected about unchanged from 1994/95. But typhoon damage strained available government food supplies. And with prices rising rapidly, farmers withheld much of the fall rice harvest, exacerbating the crisis and leading the government to import to reduce prices. Additional import contracts made in recent weeks pushed known Philippine 1996 import contracts above the previous USDA projection, increasing it again. U.S. SITUATION AND OUTLOOK USDA made only a minor revisions to the U.S. rice import estimate for 1994/95 and projection for 1995/96 based on final U.S. Census trade data. Final 1994/95 U.S. rice imports were lowered to 7.023 million cwt (rough) from 7.322 million last month. The import projection for 1995/96 was also lowered by 0.8 million tons to 7.5 million. By type, 1994/95 long grain imports were lowered to 6.019 million cwt (6.8 million last month) and medium grain imports were raised to 1.004 million cwt (0.522 million last month). Projections by type were also revised to reflect recent trade patterns. Long grain imports for 1995/96 were lowered to 6.5 million cwt (from 7.7 million) and medium grain imports were raised to 1.0 million cwt (from 0.6 million). These import revisions were reflected by a slight downward revision in the 1994/95 residual and 1995/96 ending stocks. USDA's final estimate of the 1995 U.S. rice crop was reported in January at 173.9 million cwt, down 12 percent from 1994's record 197.8 million. National average yields are estimated at 5,621 pounds per acre, 5.8 percent below the 1994 record. Rice plantings in 1995 are estimated at 3.121 million acres. The outlook for 1996 remains highly dependent on the outcome of the farm bill debate. USDA's first indication of producer planting intentions for the 1996/97 U.S. rice crop will be in the Prospective Plantings report released on March 31, 1996. A summary of crop activity and progress by State, including the national average, will be published weekly by NASS in the Crop Progress report beginning the first week in April. Total 1995/96 domestic use is forecast at a record 104.2 million cwt on the strength of 4 percent growth in food use to a record 77 million cwt. U.S. rice exports and sales commitments combined are running 19 percent behind last year's pace through the first 6 months of 1995/96, according to the U.S. Export Sales Report of February 1, 1996. However, pace-to-date remains supportive of USDA's 1995/96 U.S. export estimate of 84 million cwt. Lower production and continued strong domestic use and exports are expected to reduce 1995/96 U.S. rice ending stocks to 24.6 million cwt (rough), down 0.8 million cwt from last month and 22 percent from a year earlier. This represents 13.1 percent of total use, the lowest since 1980/81. ****************************************************************************** * INFORMATION CONTACTS AT THE ECONOMIC RESEARCH SERVICE: * * * * Randall D. Schnepf, domestic (202) 501-8513 * * Carol Whitton, international (202) 219-0825 * * * * Next month's Rice Outlook will be available on March 13, 1996. * ****************************************************************************** NOTE: USDA's WASDE commodity tables are available on the AutoFAX directory 66900. The rice tables are located at 66905 and will no longer be available on the rice directory (12400) at 12462 as in the past. 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. exports and sales commitments, 1989/90 to present Table 5- U.S. and Thailand f.o.b. export prices, 1986/87 to present Table 6- 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 3.121 Harvested | 2.687 2.823 2.781 3.132 2.833 | 3.316 3.093 | | | Pounds per harvested acre | Yield | 5,749 5,529 5,731 5,736 5,510 | 5,964 5,621 | | | 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 | 197.8 173.9 Imports | 4.4 4.8 5.3 6.1 6.9 | 7.0 7.5 Total supply| 185.6 187.2 189.2 213.2 202.5 | 230.6 212.8 | | 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 | 5.1 8.0 Domestic use| 82.2 91.6 95.4 96.7 101.5 | 98.3 104.2 | | Exports | 77.1 71.0 66.4 77.0 75.2 | 100.9 84.0 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 76.0 Total use | 159.3 162.6 161.8 173.7 176.7 | 199.2 188.2 | | End. stocks | 26.3 24.6 27.4 39.4 25.8 | 31.4 24.6 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 24.6 | | | Percent | Stocks-use | 16.5 15.1 16.9 22.7 14.6 | 15.8 13.1 | | Average farm | $/cwt | 8.25 price 4/ | 7.35 6.68 7.58 5.89 7.98 | 6.78 -9.25 | | 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 12,010 6.89 12,610 5.21 12,950 Oct | 8.77 12,493 6.47 13,381 6.10 14,804 Nov | 9.12 12,951 6.53 15,470 8.06 15,228 Dec | 9.36 12,503 6.56 17,479 8.91 12,722 Jan | 9.27 1/ 11,978 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/ | 8.72 11,978 6.78 14,565 7.98 11,352 Total 3/ | 8.00-9.00 4/ 174,783 5/ 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. 5/ Final 1994/95 marketings available in February 1996. Table 3- USDA calculated world market rice prices, 1993/94 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 | 8.47 6.82 6.63 5.85 5.59 5.31 6.56 6.15 5.86 Dec | 8.17 7.16 6.95 5.82 5.59 5.31 7.26 6.85 6.53 Jan | 8.11 7.19 7.13 6.21 5.62 5.58 7.35 7.00 6.73 Feb 3/| 7.96 7.52 7.70 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/| 8.21 6.84 6.73 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. exports and sales commitments, 1989/90 to present 1/ ============================================================================== |1995/96 |1994/95 | Country |--------|--------1994/95 |1993/94 1992/93 1991/92 1990/91 1989/90 or | as of | as of | region |02/01/96|02/01/95 Final | Final Final Final Final Final ============================================================================== | | | 1,000 metric tons Eur. Union | 236 | 330 474 | 362 362 263 383 359 O W Eur | 143 | 150 22 | 18 47 44 46 40 Turkey | 130 | 130 259 | 67 191 154 153 138 East Eur. | 31 | 30 58 | 10 46 39 30 20 FSU | 14 | 19 18 | 4 15 42 0 0 | | | Japan | 201 | 1 2 | 568 0 0 0 0 | | | OTH ASIA/ME| 322 | 347 527 | 349 438 228 304 613 Iran | 72 | 106 191 | 121 130 7 0 0 Iraq | 0 | 0 0 | 0 0 0 0 299 S. Arabia | 125 | 107 153 | 157 205 146 180 145 | | | AFRICA | 240 | 171 257 | 258 315 244 316 299 Cote d'Iv.| 88 | 40 57 | 67 92 56 78 35 Senegal | 5 | 15 28 | 75 87 37 62 57 RSA | 75 | 95 113 | 90 111 103 87 103 | | | W HEMIS. | 518 | 1,005 1,585 | 513 663 771 779 656 Canada | 69 | 83 127 | 91 98 88 109 96 Mexico | 123 | 154 327 | 177 249 118 87 198 Haiti | 82 | 44 148 | 43 117 97 34 17 Jamaica | 50 | 38 74 | 63 30 56 74 68 Brazil | 2 | 397 368 | 12 0 187 295 0 | | | Total | 1,705 | 2,100 3,201 | 2,149 2,075 1,783 2,009 2,137 ------------------------------------------------------------------------------ Census 2/ |2,667 4/| 3,324 | 2,523 2,443 2,113 2,300 2,532 Diff. 3/ |294 5/| 123 | 373 367 329 291 396 ============================================================================== Note: the "U.S. Export Sales Report" reports sales and shipments in product weight. The milled equivalent total may vary significantly from year to year based on the share of rough rice exports. 1/ Columns labeled "Final" represent final exports as reported by the "U.S. Export Sales Report," FAS, USDA. Columns labeled "as of" represent combined exports plus sales commitments. 2/ The U.S. Census Bureau rice export total (reported on a milled equivalent basis) is the official export total. 3/ The "U.S. Export Sales Report" does not include U.S. Government exports under under PL 480 Titles II and III, Section 416, and Food for Peace exports. 4/ USDA forecast, milled equivalent. 5/ The average difference between the Census and the "U.S. Export Sales Report" for 1990/91-1994/95. Table 5- 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 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 | 358 353 380 333 305 314 297 276 Jul '95 | 392 353 406 353 341 335 321 297 1994/95 | 314 375 348 290 276 270 255 232 | Aug '95 | 386 364 419 346 343 327 310 288 Sep '95 | 386 380 424 363 351 342 318 284 Oct '95 | 430 432 485 392 372 370 339 293 Nov '95 | 441 441 463 354 342 334 315 296 Dec '95 | 419 496 463 347 337 326 307 278 Jan '96 | 410 507 454 372 355 350 321 271 Feb '96 8/| 408 507 452 378 357 350 313 256 Mar '96 | Apr '96 | May '96 | Jun '96 | Jul '96 | 1995/96 9/| 411 447 451 365 351 343 318 281 ============================================================================== 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. 9/ Preliminary. able 6- U.S. rice supply and use, by type, 1989/90 to present 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 2.335 Harvested | 1.998 2.065 2.023 2.372 2.028 | 2.379 2.312 | Pounds per harvested acre | Yield | 5,464 5,221 5,395 5,397 5,082 | 5,609 5,265 | 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 | 133.4 121.7 Imports | 4.0 4.3 4.7 5.4 6.2 | 6.0 6.5 Total supply| 128.6 125.3 125.4 146.4 130.9 | 154.5 142.7 | | Dom. use 3/ | 54.5 57.8 61.4 60.8 67.2 | 59.0 65.0 Exports | 60.8 56.0 51.0 64.0 48.6 | 81.0 64.0 Total use | 115.3 113.8 112.4 124.8 115.8 | 140.0 129.0 | | End. stocks | 13.2 11.5 13.0 21.6 15.1 | 14.5 13.7 | Percent | Stocks-use | 11.5 10.1 11.6 17.3 13.0 | 10.3 10.6 ------------------------------------------------------------------------------ MEDIUM & SHORT-GRAIN | | Million acres | Planted | 0.700 0.768 0.771 0.768 0.818 | 0.943 0.786 Harvested | 0.689 0.758 0.758 0.760 0.805 | 0.937 0.781 | Pounds per harvested acre | Yield | 6,579 6,370 6,627 6,795 6,590 | 6,866 6,676 | 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 | 1.0 1.0 Total supply| 55.6 60.5 62.4 64.8 70.9 | 74.9 69.4 | | Dom. use 3/ | 27.7 33.8 34.0 35.9 34.3 | 39.2 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 | 59.1 59.2 | | End. stocks | 11.6 11.7 12.9 15.8 10.0 | 15.8 10.2 | Percent | Stocks-use | 26.5 24.0 26.1 32.4 16.4 | 26.8 16.5 ------------------------------------------------------------------------------ End. stocks | | difference 1/| 2.4 1.4 1.4 2.0 0.7 | 1.1 1.1 ============================================================================== 1/ Stock totals by type omit brokens, screenings, and brewers. These are included in the totals for all types in table 1. 2/ Projected. 3/ Includes residual. END-END-END