“Arkansas rice acreage has cycled from low acreage one year to significantly higher acreage the following year, an average 32 percent higher acreage,” says Bobby Coats, economist, Arkansas Department of Agriculture.
Coats says Arkansas long-grain rice averaged 959,000 acres for years 2011, 2013, 2015, 2017, and 2019. In alternate years — 2012, 2014, 2016, 2018 — Arkansas long-grain rice acreage averaged 1.267 million acres.
“This is very hard and disruptive, especially on Arkansas and Mississippi River Valley Delta rice supporting infrastructure,” Coats explains. “U.S. long-grain volatility has not been as erratic, with only an average low to high acreage swing of about 15 percent over the past seven years.”
Current outlook indicates U.S. 2019 long-grain rice harvested acreage will decline about 20 percent from last year, Coats says.
Arkansas producers should harvest 935,000 acres of long-grain rice, 25 percent below last year’s 1.245 million acres.
Louisiana long-grain rice acreage is down 10.5 percent. Mississippi is down 18 percent; Missouri is down 21.3 percent; and Texas acreage drops 17.5 percent.
Based on the Nov. 8, 2019, USDA Supply and Demand Estimates report, Arkansas harvested 1.126 million acres with a 7,500 pounds per acre yield, and 84.45 million hundredweight, unchanged from October to November.
Mississippi, Louisiana, and Texas acreage, yield, and production did not change from October to November, according to USDA.
Data include all rice, Coats says, because the USDA balance sheet does not distinguish between long-grain and medium-grain rice.
He says the later the planting season in 2019, the more producers leaned on hybrid rice and a reasonably good, extended production and harvest season to meet yield goals.
By class, Coats says, the U.S. 2019-20 long-grain crop is forecast at 127.5 million cwt, up 900.000 cwt from the September forecast but still 22 percent smaller than a year earlier. This would be the smallest U.S. long-grain rice crop since 2011-12. The combined medium- and short-grain rice crop is forecast at 61.1 million cwt, up 400,000 cwt from the September forecast and more than 1 percent above a year earlier.
“U.S. long-grain rice has a sideways near-term trading range of $11.62 to $12.63 with USDA currently projecting a 2019-20 marketing period average farm market price of $11.80 per cwt or $5.31 per bushel,” Coats says. “The longer three- to five-year trend has a definite downside bias.”
Coats notes a few factors that support a bullish long-grain rice market.
“First, probabilities continue to rise that global weather patterns will slowly erode global rice production and increase global export demand, which is also true for soybeans, corn, and wheat, as the 2019-20 global marketing period progresses.
“Second, hope remains that trade talks will yield a return to more normal trade and policy relations with China and other trading partners. This would not affect rice directly but would be a huge indirect positive and price supportive.
“Fourth, 2019 milling yield is problematic or below normal, which is likely due to crop lateness, coupled with September heat stress.
“Fifth, U.S. and global fiscal and monetary policymakers implement stimulus-driven global growth policies that lift commodity sector prices.
“And sixth, market participants become increasingly concerned that China’s rice stocks and/or quality are significantly overstated.”
The bears also have a say.
“First,” Coats says, “global weather patterns could return to normal or neutral and global milled rice production could remain at the 2019-20 current estimated production level of 497.8 million metric tons, which is the second highest on record and slightly below the 2018-19 level of 499 million tons.
“Second, trade negotiations, especially with China and other trading partners, could fall dramatically short of raising demand to pre-tariff levels and new global buyers will not emerge.
“Third, near term, U.S. and global fiscal and monetary policymakers limit global stimulus driven activities; therefore, global economic momentum remains less than supportive of the commodity complex.
“Fourth, global production efficiencies continue to overcome global production constraints, due to weather, disease, insect, and other issues and limited food security concerns.
“Fifth, market participants expect 2020 U.S. long-grain rice acreage to be up 25 percent or more over 2019.
“Finally, sixth, near-term, anemic slow growth and global demand for commodities remain.”
World rice supply and demand
Supply and demand figures show high acreage, production, and ending stocks, Coats says.
• 2019-20 world rice acreage estimated at 162.3 million hectares, the third highest on record and slightly below the 2018-19 163.4 million hectares.
• 2019-20 world rice beginning stocks estimated at a record 172 million metric tons.
• 2019-20 world rice rough production estimated at 743.5 million metric tons is the second highest on record.
• 2019-20 world rice total production is estimated at 713.5 million metric tons, the highest on record.
• 2019-20 world rice exports, estimated at 45.9 million metric tons, is the third highest on record.
• 2019-20 world rice domestic consumption, estimated at 493 million metric tons, is the largest on record.
• 2019-20 world rice ending stocks, estimated at 175 million metric tons, is the highest on record.
• 2018-19 world rice yield, estimated at 4.58 metric tons per hectare, is the highest on record.
The key criticism of USDA’s global supply and demand numbers, which is justified, shows that China holds a large part of the stocks, which certainly creates elevated uncertainty as to their actual holding, Coats says.
U.S. long-grain supply and demand
U.S. long-grain rice supply and demand numbers show the volatility Coats notes above.
• 2019-20 long-grain rice beginning stocks 32.6 million cwt, the third largest since 1986.
• 2019-20 long-grain rice production is estimated at 127.5 million cwt, 22 percent below 2018-19.
• 2019-20 long-grain rice total supply is estimated at 184 million cwt.
• 2019-20 long-grain rice domestic and residual use estimate is 98 million cwt.
• 2019-20 long-grain rice exports total are estimated at 66 million cwt.
• 2019-20 long-grain rice total use is estimated at 164 million cwt.
• 2019-20 long-grain rice ending stocks are estimated at 20.1 million cwt.
• 2019-20 long-grain rice season-average farm price is estimated at $11.80 per cwt or $5.31 per bushel.
Source: Ron Smith, Delta Farm Press
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