USDA Rice Outlook

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13 March 2012

USDA Rice Outlook - March 2012

This month, USDA made several small revisions to the U.S. 2011/12 rice balance sheet. On the supply side, total imports were raised 1.0 million cwt to 20.0 million cwt, up 5 percent from a year earlier and the first year-to-year increase since 2007/08.

U.S. 2011/12 Import Forecast Raised to 20.0 Million Cwt

While the total export forecast remains unchanged at 89.0 million cwt, there was a 1.0- million cwt shift from long-grain exports to combined medium- and short-grain exports. By type, rough-rice exports were lowered 1.0 million cwt and milled-rice exports raised 1.0 million. Total domestic and residual use remains forecast at 124.0 million cwt. On balance, these revisions resulted in a 1.0-million cwt increase in the all-rice ending stocks forecast to 40.5 million cwt, still more than 16 percent below a year earlier.

The season-average farm prices (SAFP) by class were revised this month. The 2011/12 SAFP for U.S. long-grain rice was lowered 20 cents on both the high- and lowend from last month to $13.20-$13.80 per cwt. In contrast, the combined medium- and short-grain 2011/12 U.S. SAFP was raised 20 cents on both the low end and high end to $15.40-$$16.00 per cwt. These two revisions were offsetting, leaving the all-rice 2011/12 SAFP projected at $13.90-$14.50 per cwt.

This month, USDA revised average 2006/07-2011/12 milling rates for about 40 countries based largely on information acquired by the Foreign Agricultural Service from U.S. embassies on actual milling yields, milling practices, and milling technology. Substantial revisions in the milling rate were made for Burma, Nigeria, and Turkey. Other revisions were much smaller.

The 2011/12 global rice production forecast was raised 2.65 million tons this month to a record 465.4 million tons (milled basis). Production forecasts were raised for Burma, Colombia, the EU, India, Malaysia, and Nigeria, but lowered for Brazil, Ecuador, Guyana, and the Philippines. Several revisions were the result of the revised milling rates. The 2011/12 global disappearance forecast was raised 3.0 million tons to a record 462.9 million tons, with Burma, India, and Nigeria accounting for most of the upward revision. The 2011/12 global ending stocks forecast was increased 0.2 million tons to 100.3 million tons, the highest since 2002/03. Ending stocks forecasts for 2011/12 were raised for Cambodia, Colombia, Malaysia, the Philippines, and the United States.

The global calendar year 2012 trade forecast was lowered 0.1 million tons (milled basis) from last month’s forecast to 32.7 million tons, almost 7 percent below the 2011 record of 35.1 million tons. The only export revision this month was a reduction in Brazil’s export forecast. On the import side, Brazil’s imports were revised up, while Malaysia’s import forecast was lowered.

Trading prices for Thailand’s high- and medium-quality grades of non-specialty rice have increased slightly since early February, mostly due a stronger Thai baht. In contrast, price quotes from Vietnam fell over the past month, mostly a response to lower priced rice from India and Pakistan. U.S. long-grain milled-rice prices and long-grain rough-rice export prices have also declined from a month earlier. Prices for California rice for the domestic and export markets have declined over the past month as well.

Domestic Outlook

U.S. 2011/12 Import Forecast Raised to 20.0 Million Cwt

The total U.S. 2011/12 rice supply is forecast at 253.5 million cwt, up 1.0 million from last month’s forecast, but almost 15 percent below the year-earlier record. In 2011/12, a much smaller crop has more than offset a larger carryin and stronger imports. By class, long-grain total supplies are forecast at 169.6 million cwt, up 1.0 million cwt from last month’s forecast, but 24 percent below a year earlier and the smallest since 2000/01. In contrast, combined medium- and short-grain total supplies are forecast at 81.2 million cwt, unchanged from last month but 11 percent larger than a year earlier and the highest since 1983/84. Supplies of broken rice kernels are not specified by class.

The 2011/12 U.S. rice crop remains estimated at 185.0 million cwt, down 24 percent from the year-earlier record and the smallest since 1998/99. Production declined in 2011/12 in all reported States except California. By class, long-grain production remains estimated at 116.4 million, a 37-percent decline from a year earlier and the smallest U.S. long-grain crop since 1996/97. Combined medium- and short-grain production is estimated at 68.6 million cwt, 15 percent higher than a year earlier and the largest on record.

Beginning stocks of all-rice remain estimated at 48.5 million cwt, 33 percent larger than a year earlier and the largest since 1987/88. The 2011/12 long-grain carryin remains estimated at 35.6 million cwt, 55 percent larger than a year earlier. In contrast, the medium/short-grain carryin remains estimated at 10.1 million cwt, 16 percent below a year earlier. Beginning stocks of brokens are estimated at 2.7 million cwt, a 91-percent increase from a year earlier.

Total U.S. rice imports for 2011/12 are forecast at 20.0 million cwt, up 1.0 million cwt from last month’s forecast and 5 percent above a year earlier. This is the first year-toyear increase since 2007/08. This month’s upward revision was based on monthly Census delivery data through December and expectations regarding imports the remainder of the market year. Imports in November and December were especially strong, with the December shipments the largest since October 2009.

Long-grain imports for 2011/12 are projected at 17.5 million cwt, up 1.0 million cwt from last month’s forecast and 11 percent larger than a year earlier. Thailand supplies more than 60 percent of U.S. long-grain imports, with its premium jasmine rice accounting for nearly all of its shipments to the United States. India is the second largest U.S. supplier, accounting for about 15 percent of U.S. long-grain rice imports. Through November, Brazil had shipped more than 21,000 tons of long-grain rice to the Unite States, making it the third largest supplier of long-grain rice imports to the U.S. Brazil is not a typical supplier of rice to the United States and its shipments to the U.S. dropped sharply in December. Pakistan supplies most of the remaining U.S. long-grain rice imports. Pakistan and India’s rice shipments to the U.S. are almost exclusively basmati rice.

U.S. medium- and short-grain imports remain projected at 2.5 million cwt, virtually unchanged from 2010/11. Specialty rice from Thailand that is classified by the U.S. Census Bureau as medium- and short-grain rice accounts for the bulk of U.S. medium- and short-grain imports. Italy ships much smaller amounts of Arborio rice to the U.S., as well.

U.S. 2011/12 Long-grain Export Forecast Lowered to 57.0 Million Cwt

Total use of U.S. rice in 2011/12 remains projected at 213.0 million cwt, 15 percent below the year-earlier record. By class, long-grain total use is projected at 146.0 million cwt, 1.0 million cwt below last month and 22 percent smaller than the year-earlier record. In contrast, medium/short-grain total use is forecast at a record 67.0 million cwt, up 1.0 million cwt from last month and 6 percent above a year earlier.

Total domestic and residual use of all-rice in 2011/12 remains projected at 124.0 million cwt, down 10 percent from the year-earlier record. Much of the year-to-year decline in domestic and residual use is based on expectations of smaller losses in processing, handling, and transporting associated with a smaller crop. By class, long-grain domestic disappearance remains projected at 89.0 million cwt, an 18-percent drop from the year-earlier record. Combined medium- and short-grain domestic disappearance remains projected at 35.0 million cwt, an increase of 19 percent from 2010/11.

Total exports of U.S. rice in 2011/12 remain projected at 89.0 million cwt, 26 percent below 2010/11 and the smallest since 2000/01. There were offsetting shifts by class and type this month. The U.S. long-grain export forecast was lowered 1.0 million cwt to 57.0 million cwt, 27 percent below a year earlier. The downward revision was based on Census data through December, information from the U.S. Export Sales through February, and expectations regarding sales the remainder of the market year. These are the smallest U.S. long-grain exports since 1991/92. Sub-Saharan Africa, the Middle East, Central America, and South America account for most of the expected decline in U.S. long-grain exports in 2011/12. The year-to-year decline is mostly a result of greater competition from other suppliers and, in some import markets, larger domestic crops.

The smaller long-grain export forecast was offset by a 1-million cwt increase in the combined medium- and short-grain export forecast to 32.0 million cwt, still 5 percent below a year earlier. The United States is facing much stronger competition from both Australia and Egypt in the Pacific and Middle East than it did a year earlier.

By type, the U.S. rough-rice export forecast was lowered 1.0 million cwt to 31.0 million cwt, 11 percent below a year earlier. Central and South America account for most of the expected year-to-year decline in U.S. rough-rice exports. Mexico and Central America are the largest markets for U.S. rough-rice exports, taking long-grain from the South almost exclusively. South America is an occasional buyer of U.S. rough-rice when regional supplies are low. Through February, U.S. shipments and sales to Mexico have been well ahead of a year earlier, while purchases by Central America are well behind a year earlier. U.S. sales to South America have been quite small thus far in 2011/12.

The weaker rough-rice export forecast was offset by a 1.0-million cwt increase in the U.S. milled-rice export forecast (combined milled and brown rice exports on a rough basis) to 58.0 million cwt. Despite the upward revision, U.S. milled rice exports are 24 percent below a year earlier and the smallest U.S. milled-rice exports since 1985/86. Africa and the Middle East account for the bulk of the expected decline in U.S. milledrice exports in 2011/12, mostly due to greater competition from lower-priced suppliers.

U.S. ending stocks of all-rice in 2011/12 are projected at 40.5 million cwt, up 1.0 million cwt from last month’s forecast, but more than 16 percent below a year earlier. The stocks-to-use ratio is calculated at 19.0 percent, down from 19.4 percent in 2010/11. By class, the 2011/12 U.S. long-grain carryout is projected at 23.6 million cwt, up 2.0 million cwt from last month’s calculation, but 34 percent below a year earlier. The longgrain stocks-to-use ratio is calculated at 16.1 percent, down from 19.1 percent in 2010/11.

The medium/short-grain carryout is projected at 14.2 million cwt, down 1.0 million cwt from last month, but up 40 percent from a year earlier and the largest medium- and short-grain carryout since 2000/01. Ending stocks of this size are expected to pressure U.S. medium- and short-grain prices downward the remainder of the year. The year-toyear increase is primarily due to much larger U.S. supplies and only a modest expansion in use. The medium/short-grain stocks-to-use ratio is calculated at 21.2 percent, up substantially from 16.1 percent in 2010/11.

U.S. 2011/12 Season-Average Price Forecast for Long-Grain Rice Lowered to $13.20-$13.80 Cwt

The 2011/12 season-average farm price (SAFP) for U.S. long-grain rice is projected at $13.20-$13.80 per cwt, down 20 cents on both the low-end and high-end from last month’s forecast. The downward revision is based on NASS prices through January and on expectations regarding U.S. rough-rice prices the remainder of the market year. Despite this month’s downward revision, the long-grain SAFP remains well above the $11.00 price in 2010/11. U.S. long-grain prices in 2011/12 are being supported by much smaller U.S. supplies.

The combined medium- and short-grain 2011/12 U.S. SAFP is projected at $15.40- $16.00 per cwt, up 20 cents on both the low end and high end from last month’s forecast. The midpoint of $15.70 is $3.10 below the 2010/11 SAFP of $18.80 per cwt. In 2011/12, U.S. medium- and short-grain prices are facing pressure from much larger U.S. supplies and increased competition from Australia and Egypt in the global rice market.

In late February, NASS reported a mid-February U.S. long-grain rough-rice price of $13.40 per cwt, down 20 cents from a revised January estimate. The January price was lowered 40 cents from the mid-month estimate to $13.60. For combined medium- and short-grain rice, the mid-February NASS price was reported at $15.30 per cwt, up 10 cents from the revised January price. The January medium- and short-grain rough-rice cash price was lowered 10 cents from the mid-month estimate to $15.20 per cwt. U.S. medium- and short-grain rough-rice prices have declined $3.70 per cwt since August.

International Rice Market

Production Forecasts for 2011/12 Raised for India; Lowered for Brazil

The 2011/12 global rice production forecast was raised 2.65 million tons this month to 465.4 million tons (milled basis). The crop is almost 3 percent above a year earlier and the highest on record. Australia, Bangladesh, China, Egypt, the EU, India, Indonesia, Pakistan, and Sri Lanka account for most of the projected year-to-year increase in global production in 2011/12. In contrast, production is projected to be substantially lower in 2011/12 than a year earlier in Argentina, Brazil, Burma, Ecuador, Peru, the United States, and Uruguay. By region, production was record-high in Asia, but down sharply in the Western Hemisphere.

The bumper global rice crop is largely the result of expanded area. At 160.2 million hectares global harvested area in 2011/12 is up 2 percent from a year earlier and the highest on record. South Asia accounts for most of the projected increase in global rice area 2011/12. The average global yield of 4.33 tons per hectare (rough-basis) is fractionally above a year earlier and the highest on record.

This month, USDA revised average 2006/07-2011/12 milling rates for about 40 countries largely based on information obtained from the Foreign Agricultural Service from U.S. embassies on actual milling yields, milling practices, and milling technology to better estimate individual country milling rates. Substantial revisions in the milling rate were made for Burma, Nigeria, and Turkey. Changes for most other countries were small and the milling rates for China and India—the two largest producing countries— were not revised. See Table 12 in this report for a list of countries whose milling rates was changed and their revised and previous milling rate.

The largest production increase this month was made for Burma, with the production estimate raised 1.1 million tons to 11.6 million tons, a result of a much higher average milling rate. Area, field yield, and rough-rice production for Burma are unchanged from last month. India’s 2011/12 production forecast was raised 750,000 tons to a record 102.75 million based on government data. The Government of India’s Second Advanced Estimate indicated a record kharif crop of 90.2 million tons. The much smaller dry-season rabi crop, currently estimated by the Government of India at 12.6 million tons, has not yet been harvested. Malaysia’s 2011/12 production forecast was raised 60,000 tons to a record 1.7 million based on information from the U.S. Agricultural Counselor in Kula Lumpur indicating a higher area estimate. The milled yield for Malaysia was fractionally lowered.

Revised milling rates resulted in higher production forecasts for several countries. Egypt’s 2011/12 production estimate was raised 0.26 million tons to a record 4.56 million tons, a 39-percent increase from a year earlier. Colombia’s 2011/12 crop was raised 0.2 million tons to 1.66 million tons. Nigeria’s 2011/12 production was increased more than 0.1 million tons to a near-record 2.7 million. Total rice production in the EU in 2011/12 was revised up 164,000 tons to a record 2.1 million tons. Other 2011/12 production increases (on a milled-equivalent basis) caused by milling rate changes were much smaller.

These upward production revisions were partially offset by several downward revisions, mostly in South America. Brazil’s 2011/12 production forecast was lowered 136,000 tons to 7.7 million tons based on revised area, yield, and production estimates reported by the Government of Brazil. The lower crop forecast is largely due to drought in Rio Grande du Sol, the largest rice producing state in Brazil. Ecuador’s 2011/12 crop projection was lowered 82,000 tons to 624,000 based on a much lower yield resulting from excessive rain since January. This is the smallest production for Ecuador since 1999/2000. Guyana’s 2011/12 production forecast was lowered 22,000 tons to 402,000 largely based on recent heavy rains that caused severe flooding in several locations. Outside South America, the Philippines’ 2011/12 production forecast was lowered 84,000 tons to 10.6 million based on a smaller milling yield. There were several smaller downward production revisions for 2011/12 based on revised milling yields.

The 2010/11 global production estimate was raised 2.1 million tons to 453.2 million tons, up 2 percent from a year earlier. Nearly all upward revisions were the result of this month’s milling rate revisions. Burma accounted for about half the upward revision, with its 2010/11 production estimate raised 1.1 million tons to a record 11.9 million tons. Columbia’s 2010/11 production was raised almost 0.2 million tons to 1.5 million tons. Egypt’s production was revised up 0.2 million tons to 3.3 million, still the smallest crop since 1998/99 and the result of a big area decline. EU production was increased 160,000 tons to 2.03 million tons. Nigeria’s 2010/11 production estimate was raised 125,000 tons to 2.6 million tons.

Global disappearance for 2011/12 is projected at 462.9 million tons, 3.0 million tons above last month’s forecast and the highest on record. Burma, India, and Nigeria account for most of this month’s upward revision in global disappearance. Global disappearance in 2011/12 is 3 percent larger than a year earlier, with India accounting for the largest share of the year-to-year increase in global disappearance. Disappearance is also projected to be higher in 2011/12 in Bangladesh, China, Thailand, and Vietnam; but is projected to decline in Brazil, Ecuador, the Philippines, and the United States. In addition to consumption, total disappearance for any country includes unreported losses in processing, transporting, and marketing.

Global ending stocks for 2011/12 are projected at 100.3 million tons, up 0.2 million tons from last month’s forecast and almost 3 percent larger than a year earlier. Ending stocks forecasts for 2011/12 were raised this month for Cambodia, Colombia, Malaysia, the Philippines, and the United States. China, India, and Thailand account for most of the projected year-to-year increase in global ending stocks. In contrast, ending stocks are projected to decline in 2011/12 in Brazil, Indonesia, the Philippines, and the United States. This is the fifth consecutive annual increase in global ending stocks, with ending stocks the highest since 2002/03. The global stocks-to-use ratio for 2011/12 is calculated at 21.7 percent, virtually unchanged from 2010/11.

Brazil’s Rice Exports Are Projected To Decline Sharply in 2012

The global calendar year 2012 trade forecast was lowered 0.1 million tons (milled basis) from last month’s forecast to 32.7 million tons, almost 7 percent below the 2011 record of 35.1 million tons. The decline in global trade this year is largely due to weaker demand for imports from several top buyers, particularly Bangladesh and Indonesia.

The only export revision this month was a 100,000-ton reduction in Brazil’s exports to 625,000 tons, less than half the record 1.3 million tons exported in 2011. The downward revision was based on a smaller crop projection. The year-to-year decline in Brazil’s exports is based on smaller supplies in 2011/12.

On an annual basis, Thailand accounts for the bulk of the projected decline in exports in 2012, with shipments dropping 4.0 million tons to 6.5 million tons, the smallest since 1998. The sharp export contraction is largely due to the Government of Thailand’s current policy of purchasing rice from growers at about twice the market price, making Thailand uncompetitive in many global markets. Exports are also projected to be smaller in 2012 for Argentina, Brazil, Paraguay, the United States, and Vietnam. In contrast, Australia, Egypt, India, and Pakistan are projected to increase exports in 2012.

There were three import revisions for 2012 this month. First, Brazil’s 2012 import forecast was raised 40,000 tons to 640,000 tons based on smaller supplies. Second, the U.S. import forecast was raised 25,000 tons to 675,000 tons based on a recent increase in the monthly pace of deliveries. And third, Malaysia’s 2012 import forecast was lowered 45,000 tons to 1.09 million tons based on a larger crop projection and information from the U.S Agricultural Counselor in Kula Lumpur.

Global trade in 2011 is estimated at 35.1 million tons, virtually unchanged from last month’s estimate, but almost 11 percent higher than a year earlier. Argentina’s 2011 export estimate was raised 57,000 tons to a record 732,000 tons based on year-end government data. In contrast, the U.S. 2011 export estimate was lowered 37,000 tons to 3.21 million based on year-end Census data.

There were several revisions for 2011 importers this month. First, the Philippines 2011 import estimate was lowered 300,000 tons to 1.2 million tons, largely based on information from the U.S. Agricultural Counselor in Manila. Malaysia’s 2011 import estimate was lowered 50,000 tons to 990,000 tons based on trade data and information from the U.S. Agricultural Counselor in Kula Lumpur. These downward revisions were nearly offset by two upward revisions. First, Bangladesh’s 2011 import estimate was raised 83,000 tons to 1.5 million tons based on trade data and information from the U.S. Agricultural Counselor in Dhaka. Second, Honduras’ 2011 import estimate was raised 20,000 tons to 130,000 based on year-end trade data.

Thailand’s Trading Prices Increase Slightly; U.S. and Vietnam Prices Continue To Declin

Trading prices for Thailand’s high- and medium-quality grades of non-specialty rice have increased slightly since early February, mostly due to a stronger Thai baht. Prices for Thailand's high-quality, 100-percent Grade B (fob vessel, Bangkok) milled rice for export were quoted at $558 per ton for the week ending March 5, up $9 from the week ending February 6. Prices for Thailand’s 5-percent brokens were quoted at $542 per ton for the week ending March 5, also up $9 from the week ending February 6. Thailand is currently making few sales at these uncompetitive price quotes.

Prices for Thailand's 5-percent parboiled rice—a specialty rice—were quoted at $574 per ton for the week ending March 5, up $23 from the week ending February 6. Exporters in Thailand are fulfilling outstanding contracts of parboiled rice to Nigeria which reportedly expects to purchase 300,000 – 400,000 tons for delivery by June 2012.

Prices for Thailand’s brokens have increased as well. For the week ending March 5, prices for Thailand’s A-1 Super 100-percent brokens were quoted at $523 per ton, up $6 from the week ending February 6. Price quotes for Thailand’s premium jasmine rice were quoted at $1,061 per ton for the week ending March 5, up $27 from February 6. All price quotes for Thailand’s rice are from the Weekly Rice Price Update, reported by the U.S. Agricultural Counselor in Bangkok.

In contrast, price quotes from Vietnam fell over the past month, mostly a response to lower priced rice from India and Pakistan. For the week ending March 6, prices for Vietnam’s 5-percent double-water polished with 5-percent brokens were quoted at $405 per ton—down $25 per ton from the week ending February 7. Thailand’s price quotes for 5 percent brokens are currently $137 per ton above quotes for Vietnam’s 5-percent double-water polished milled rice, compared with a difference of $93 last month.

U.S. long-grain milled-rice prices have declined from a month earlier. For the week ending March 6, prices for high-quality Southern long-grain rice (No. 2, 4-percent brokens, bagged, free alongside vessel, U.S. Gulf port) were quoted at $513 per ton, down $5 from February 7. U.S. long-grain milled-rice faces strong price competition in the global market and the U.S. has made few recent sales. Thai rice is now quoted with a premium of $30 compared with U.S. rice (adjusted to reflect the fob vessel price). Last month, Thailand’s rice was quoted with a premium of $16 over similar grades of U.S. rice. Thailand is currently making few sales. U.S. long-grain rough-rice (bulk, fob vessel, New Orleans) was quoted at $315 per ton for the week ending March 6, down $10 from a month earlier.

Prices for California rice for the domestic and export markets have declined over the past month as well. California’s package-quality medium-grain rice (sacked) for domestic sales remains quoted at $794 per ton for the week ending March 6, down $22 from February 7. Export prices (for 30-kg bags, fob vessel) for California milled rice were quoted at $665 per ton for the week ending March 6, down $10 from a month earlier. Both Australia and Egypt are providing more competition to the U.S. in several medium- and short-grain markets. Price quotes for Vietnam, U.S. long- and mediumgrain milled-rice prices, and U.S. rough-rice export prices are from the weekly Creed Rice Market Report.