u.s. rice market faces tighter supplies and higher prices ... 10_26... · u.s. rice market faces...

U.S. Rice Market Faces Tighter

Supplies and Higher Prices in 2017/18

University of Arkansas Webinar Series October 26, 2017Nathan Childs

Economic Research ServiceUSDA

Approved by the World Agricultural Outlook Board. Estimates and forecasts are from the October 2017 WASDE.

PART 1

THE 2017/18 GLOBAL

RICE MARKET OUTLOOK

The 2017/18 Global Rice Market:

Overview• Global rice production of 483.8 million tons (milled basis) is

projected to be 0.7 percent below the 2016/17 record.

• Smaller crops in Bangladesh, Brazil, China, Egypt, Indonesia, the Philippines, South Korea, and the United States more than offset larger production in Burma, Thailand, Vietnam.

• Global harvested area is projected at a record 161.9 million hectares, up 1.1 million hectares from 2016/17, as expanded rice area in India, Thailand, and Sri Lanka more than offsets reductions in Bangladesh, China, Egypt, Philippines, & U.S.

• Global supplies of 622.0 million tons are projected to be - record high, a result of a 5-percent larger carryin.

Global rice supplies in 2017/18are projected to be record high

0

100

200

300

400

500

600

700

90/91 95/96 00/01 05/06 09/10 12/13 17/18

Global Carryin Global Production

Milled basis. 2017/18 are forecasts. Source: Production, Supply, and Distribution database,

Foreign Agricultural Service, USDA, http://www.fas.usda.gov/psd.

MIL. TONS

Global 2017/18 Harvested Area: Economic Rationale for Expansions

• Producer price support programs remain in effect in the world’s largest rice growing countries—particularly India and China—with India’s area up 3 percent and China down only 0.5 percent despite huge stocks and record imports.

• Ideal rainfall, adequate reservoir levels, higher farm-gate prices boost Thailand’s rice area 4.4 percent, near-normal, after severe drought.

• Sri Lanka’s rice area is expected to recover from the 2016/17 abnormally small level that was sharply impacted in 2016/17 by severe flooding and then severe drought.

Global 2017/18 Rice Harvested Area: Economic Rationale for Contractions

• United States: Total harvested are dropped 23 percent.– MAIN FACTOR: A weak long-grain price outlook at planting, plus – Heavy rainfall and flooding early in the season in California and in

much of the South. – Late summer Gulf Coast hurricanes.

• Severe spring and summer flooding reduced harvested area 4 percent in Bangladesh, mostly reducing the Aman crop.

• Egypt’s rice harvested area dropped 10 percent due to stricter area controls and shifts in planting to cotton & corn.

• Philippines rice area is projected to drop 5 percent, mostly due to expectations of increased imports.

Thailand’s 2017/18 rice area and production are expected to return to pre-drought levels

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9

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11

12

0

2

4

6

8

10

12

14

16

18

20

22

24

90/91 95/96 02/03 07/08 11/12 17/18

Production Area

2017/18 are forecasts. Source: Production, Supply, and Distribution database, Foreign

Agricultural Service, USDA, http://www.fas.usda.gov/psd.

Mil. tonsMil. Ha.

The 2017/18 Global Rice Market: Decreases in Production

• Largest production declines are projected for:

• Bangladesh down 1.6 million tons or -4.6 percent

• China down 850,000 tons or -0.6 percent

• Brazil down 562,000 tons or -6.7 percent

• Egypt down 500,000 tons or -10.4 percent

• Philippines down 486,000 tons or -4.2 percent

• Madagascar down 394,000 tons or -16.1 percent

• South Korea down 297,000 tons or -7.1 percent

• Japan down 180,000 tons or -2.3 percent

• Indonesia down 150,000 tons or -0.4 percent

• India down 150,000 tons or -0.1 percent

The 2017/18 Global Rice Market: Increases in Production

• Largest production increases are projected for:

• Thailand up 1.2 million tons or + 6.3 percent

• Sri Lanka up 903,000 tons or + 45.2 percent

• Vietnam up 479,000 tons or + 1.7 percent

• Paraguay up 141,000 tons or +28.1 percent

• Peru up 121,000 tons or +5.2 percent

• Burma up 100,000 tons or +0.8 percent

• Bolivia up 97,000 tons or +70.3 percent

• Cote d’Ivoire up 95,000 tons or +7.1 percent

• Australia up 44,000 tons or + 7.5 percent

The 2017/18 Global Rice Market: Domestic Use and Ending Stocks

• At 480.5 million tons, global consumption (including a residual)

is 0.5 tons below the 2016/17 record and 3.3 million tons below

2017/18 production.

• Bangladesh, Burma, Indonesia, Thailand, and the United States

account for most of the expected decline global consumption

(including a residual component) in 2017/18.

• In contrast, rice consumption in 2017/18 is projected to

increase in China, Egypt, India, Sub-Saharan Africa, and

Vietnam.

• Global ending stocks of 141.5 million tons are projected up 4.6

million tons from 2016/17 and the highest since 2000/01.

Global ending stocks in 2017/18 areprojected to be the highest since 2000/01

0

10

20

30

40

50

0

25

50

75

100

125

150

175

80/81 85/86 90/91 95/96 02/03 07/08 11/12 17/18

Ending Stocks Stocks-to-Use Ratio

2017/18 are forecasts. Source: Production, Supply, and Distribution

database, Foreign Agricultural Service, USDA, http://www.fas.usda.gov/psd.

MILL. TONS PERCENT

China is expected to hold more than 65 percent of global ending stocks in 2017/18

0

20

40

60

80

100

120

140

160

180

1990/91 1995/96 2000/01 2005/06 2010/11 2017/18

China India Thailand Rest of World

MIL. TONS

2017/18 are forecasts. Milled basis. Source: Production, Supply, and Distribution


However, ending stocks by the top 5 exporters are decling

0

10

20

30

40

50

2000/2001 04/05 08/09 11/12 14/15 17/18

India Thailand Vietnam United States Pakistan

MIL. TONS

2017/18 are forecasts. Milled basis. Source: Production, Supply, and Distribution


The Global Rice Exporters:

Calendar Year 2018• Global rice trade in 2018 is projected to drop 0.3 percent

from the 2017 record to 44.4 million tons (milled basis), the second highest on record.

• In 2018, Argentina, Burma (down 300K), Cambodia, Thailand (down 500k), and the United States are projected to export less rice.

• In contrast, Australia, China, India (up 600K and record), and Pakistan are projected to increase exports.

• India and Thailand are projected to remain the top rice exporters in 2018, followed again by Vietnam and Pakistan.

The Global Rice Importers: Calendar Year 2018

• China is projected to remain the number one rice importer, taking 5.25 million tons, unchanged from the 2017 record.

• Nigeria (2.3 mmt), the EU (record 1.9 mmt), the Philippines (1.7 mmt), Cote d’Ivoire (record 1.5 mmt), Saudi Arabia (1.45 mmt), Iran (1.3 mmt) and Bangladesh (1.2 mmt) are projected to be the next largest buyers.

• Sub-Saharan Africa (up 410K mt and record), the Philippines (up 600k mt), and Bangladesh, account for most of the expected increase in global rice imports in 2018.

• In contrast, Egypt (-100K), Iran (-300K), Nigeria (-100K), and Sri Lanka (-500K) are all expected to import less rice in 2018. .

About 9 percent of global rice production is traded annually, double the share 25 year ago

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0

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25

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45

50

1981 1986 1991 1996 2001 2006 2011 2013 2017

Rice Trade Trade Share of Production

2017 and 2018 are forecasts. Source: Production, Supply, and Distribution


MILL. TONS PERCENT

Thailand and India are projected to remainthe top rice exporting countries in 2017 and 2018

0.0

2.0

4.0

6.0

8.0

10.0

12.0

India Thailand Vietnam Pakistan USA Burma

2015

2016

2017

2018

2017 and 2018 forecasts. These countries account for about 85 percent of global rice exports.

Source: Production, Supply, and Distribution database, Foreign Agricultural Service, USDA,

http://www.fas.usda.gov/psd.

MIL. TONS Major Exporters

Burma’s 2017 rice exports are projected to be the highest since before WWII

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2200

2400

2600

2001 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 2018

BURMA

CAMBODIA

2017 and 2018 are forecasts. Source: Production, Supply, and Distribution database,


1,000 TONS

China is expected to remain the largest rice importing country; Nigeria to remain number two

0

1

2

3

4

5

6

2010 2012 2014 2016 2018

China Nigeria



MIL. TONS

With steady growth, Cote d’Ivoire is projected to be the fifth largest rice importing country in 2018

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

Philippines EU Coted'Ivoire

SaudiArabia

Iran Iraq

2014 2015 2016 2017 2018



1,000 TONS

Little change in Thailand’s export prices,

while U.S. prices continue rising

$0$100$200$300$400$500$600$700$800$900

$1,000$1,100$1,200

U.S. No. 2 Long-grain Thai 100 % Grade B

Vietnam's 5 Percent Brokens

All prices quoted “free-on-board” vessel at local port. Sources: Thai quotes, U.S. Ag Counselor,

Bangkok; U.S. and Vietnam quotes, Creed Rice Market Report.

$/TON

PART 2

THE U.S. 2017/18

RICE MARKET OUTLOOK

The U.S. 2017/18 Rice Market: Main Points

• Declining prices and historic flooding at planting, plus late summer Gulf

Coast hurricanes, resulted in a 23-percent drop in U.S. long-grain

harvested area. California harvested area dropped 15 percent due to

heavy winter rains, historic snowpack, and resulting flooding.

• A 20-percent drop in all rice U.S. production is projected to pull U.S.

supplies down 15 percent from the 2016/17 near-record level.

• Total use—domestic and residual use plus exports—is projected to

decline 11 percent. With both categories projected to be smaller.

• Total ending stocks of all rice are projected to drop 40 percent, with the

stocks-to-use ratio of 12.6 percent, slightly below normal.

• Prices for both classes of rice in the South and for medium- and short-

grain in California are projected to be higher in 2017/18 than in 2016/17.

Arkansas accounts for the bulk of the decline in harvested area in 2017

0 200 400 600 800 1000 1200 1400 1600

TEXAS

MISSOURI

MISSISSIPPI

LOUISIANA

CALIFORNIA

ARKANSAS

TOTAL RICE HARVESTED AREA (1,000 ACRES)

2015

2016

2017

Source: USDA, National Agricultural Statistics Service, Acreage, June 2017,

National Agricultural Statistics Service, USDA.

Rice crops in 2017 estimated smallerin all producing States

Source: USDA, National Agricultural Statistics Service.

Arkansas remains the largest

rice producing State

Source: USDA, National Agricultural Statistics Service

A 23-percent drop in all rice harvested area is projected to pull U.S. production down 20 percent in 2017/18

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1.0

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275

300

81/82 86/87 91/92 96/97 01/02 06/07 11/12 17/18

AUGUST-JULY MARKET YEAR

PRODUCTION HARVESTED AREA

Rough basis. 2017/18 are forecasts. Source: World Agricultural

Supply and Use Estimates, WAOB, USDA..

MILL. CWT MILL. ACRES

U.S. rice imports are projected to increase slightly in 2017/18

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4

8

12

16

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24

28

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8

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24

28

82/83 87/88 92/93 97/98 02/03 08/09 12/13 17/18


IMPORTS 1/ SHARE OF DOMESTIC USE 2/

2017/18 are forecasts. 1/ Rough basis. 2/ Does not include seed use.Source: World Agricultural Supply and Use Estimates, WAOB, USDA.

MILL. CWT PERCENT

U.S. rice supplies are projected

to drop 15 percent in 2017/18

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300

350

92/93 95/96 98/99 01/12 04/05 07/08 10/11 13/14 17/18

Carryin Production Imports

Mill. CWT



Both U.S exports and domestic use are projected to be smaller in 2017/18 1/

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30

60

90

120

150

00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15 17/18


DOMESTIC & RESIDUAL USE EXPORTS

Rough-rice basis. 2017/18 are forecasts. 1/ Domestic use includes a residual component .

Sources: World Agricultural Supply and Use Estimates, WAOB, USDA.

MILL. CWT

The U.S. 2017/18 Rice Market: Economic Rationale

• Weaker U.S. Exports

• Smaller U.S. supplies of both classes of rice.

• Higher U.S. prices for both classes of rice.

• Bumper crops and supplies in most Asian exporting

countries.

• Lack of price competitiveness for U.S. rice outside core

markets:

– Long-grain core market are mostly in the Western

Hemisphere. The majority are rough-rice buyers.

– Medium- and short grain U.S. core markets are

Northeast Asia (milled) and to a lesser degree the

Mediterranean and North Africa (rough & milled).

Latin America typically accounts for about 60 percent of U.S. rice exports

0

1000

2000

3000

4000

5000

90/91 93/94 96/97 99/00 02/03 05/06 08/09 11/12 16/17

Mexico Other Latin America Rest-of-World

Product-weight. Does not include groats, meal, or flour. Source: Foreign Agricultural

Service, U.S. Dept. of Agriculture, Global Agricultural Trade System,

https://apps.fas.usda.gov/gats/default.aspx

1,000 TONS

https://apps.fas.usda.gov/gats/default.aspx

By type, milled-rice accounts for most of the projected decline in U.S. rice exports 2017/18

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20

40

60

80

100

90/91 94/95 98/99 02/03 06/07 10/11 14/15 17/18


MILLED RICE EXPORTS ROUGH RICE EXPORTS

Rough basis. 2017/18 are forecasts. Source: World Agricultural Supply and Use

Estimates, WAOB, USDA.

MILL. CWT

U.S. exports of both classes of rice are projected to decline in 2017/18

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20

40

60

80

100

120

90/91 92/93 94/95 96/97 98/99 00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15 17/18


LONG-GRAIN MEDIUM- AND SHORT-GRAIN


Supply and Use Estimates, WAOB, USDA.

MILL. CWT

Through October 19, U.S. all-rice exports were 22 percent below a year earlier, with rough most of the decline

0

200

400

600

800

1000

1200

1400

Oct. 20 2016 Oct. 19, 2017

Milled Brown Rough

Product-weight. Shipments plus outstanding sales. Source: Foreign Agricultural Service,

U.S. Dept. of Agriculture, weekly U.S. Export Sales report.

1,000 TONS

But U.S. long-grain exports were 7 percent above a year earlier, with milled all of the increase

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100

200

300

400

500

600

700

800

900

1000

Oct. 20 2016 Oct. 19, 2017

Milled Brown Rough



1,000 TONS

While combined medium- and short-grain exports were 63 percent below a year earlier

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100

200

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400

500

600

Oct. 20 2016 Oct. 19, 2017

Milled Brown Rough



1,000 TONS

Through October 19, U.S sales and shipments to Haiti and Mexico were well ahead of a year ago…

0 50 100 150 200 250 300

SAUDI ARABIA

COLOMBIA

VENEZUELA

CENTRAL AMERICA

HAITI

MEXICO

Oct. 20, 2016

Oct. 19, 2017

1,000 tons


U.S. Dept. of Agriculture, weekly U.S. Export Sales report

Long-grain

…but well behind last year to Northeast Asia and the Middle East

0 30 60 90 120 150 180

Libya

Jordan

Turkey

Taiwan

Korea

Japan

Oct. 20, 2016

Oct. 19, 2017

1,000 tons


U.S. Dept. of Agriculture, weekly U.S. Export Sales report

Medium- and short-grain

The U.S. 2017/18 Rice Market: Economic Rationale

– Smaller domestic and residual use

• Less post-harvest losses due to a smaller crop.

• Fewer losses in transporting, milling, and marketing, also due to the smaller crop.

• Stable historic ratio of total supply to domestic use.

• Higher prices will likely reduce some processed food and industrial uses of rice.

U.S. all-rice ending stocks are projected to decrease 40 percent in 2017/18

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25

30

0

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87/88 90/91 93/94 96/97 99/00 02/03 05/06 08/09 11/12 14/15 17/18


ENDING STOCKS STOCKS-TO-USE



MILL. CWT PERCENT

Season-average farm prices for both classes of rice are projected to be higher in 2017/18

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5

10

15

20

25

30

All rice Long-grain U.S. medium- and short-grain

2017/18 are forecasts. Source: Quick Stats, NASS, USDA, http://quickstats.nass.usda.gov/ .

$/CWT

http://quickstats.nass.usda.gov/

Both the southern and California medium- and short-grain SAFPs are projected higher

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5

10

15

20

25

30

08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18

CALIFORNIA 2/ OTHER STATES 3/

2017/18 are projected. 1/ Season-average rough-rice for medium- and short-grain rice first reported by

region for the 2008/09 market year. 2/ October-September market year. 3/ August-July market year.

Source: Quick Stats data base, NASS, USDA. http://www.nass.usda.gov/Quick_Stats/ .

$/CWT

Market years 2/

http://www.nass.usda.gov/Quick_Stats/

The U.S. 2017/18 Rice Market: Economic Rationale for Higher Prices

• Tighter U.S. supplies of both classes of rice.

• Ending stocks of both classes of rice are expected to substantially decline from 2016/17:

• With long-grain down from recent abnormal high levels

• And medium- and short-grain ending stocks becoming extremely tight.

• Area and crop losses from adverse weather early in the season in both the South and California, as well as concerns over potential damage from Gulf Coast Hurricanes pushed prices higher.

For More Information,Please Go To:

• The Economic Research Service Home Page http:// www.ers.usda.gov

• World Agricultural Supply and Demand Estimates Report https://www.usda.gov/oce/commodity/wasde/

• Grains: World Markets and Trade Reports https://www.fas.usda.gov/data/grain-world-markets-and-trade

• Production, Supply and Distribution data base https://apps.fas.usda.gov/psdonline/app/index.html#/app/home

• The Rice Topics Page http://www.ers.usda.gov/topics/crops/rice.aspx

http://www.ers.usda.gov/

https://www.usda.gov/oce/commodity/wasde/

https://www.fas.usda.gov/data/grain-world-markets-and-trade

https://apps.fas.usda.gov/psdonline/app/index.html#/app/home

http://www.ers.usda.gov/topics/crops/rice.aspx

u.s. rice market faces tighter supplies and higher prices ... 10_26... · u.s. rice market faces...

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