Market Update: U.S. Rice Market - Every Year is Different

February 23, 2024
It was a newsworthy week for the global rice markets, headlined and perhaps punctuated in the U.S. by the realization that the current pace of exports would indicate we’ll actually run out of long grain rice before harvest! Now history has taught us that “running out of rice” is highly unlikely, but if the current pace of exports holds steady for the balance of the year, projections would put us at 97.4 million cwt, where USDA projected exports sit at 61 million cwt. We expect to find ourselves somewhere in the middle, as we can’t sell what we don’t have. The U.S. industry will likely find itself with scarce supplies come harvest, much like our counterparts in South America are right now. Our outpaced exports are largely on account of short supply in the Mercosur countries and a large U.S. crop compared to previous years. Strong domestic market demand, milled rice exports to Haiti and Iraq, and an overall lower milling yield situation for long grain have contributed to an anticipated scarce supply.
While it was expected that the USDA would lower carryover stocks by raising exports (by 2 million cwt), the increase of imports by 1 million cwt to an already record 42 million cwt was unexpected. Apparently the USDA is taking the approach that the U.S. will continue to import rice to replace exports, keeping the carryover somewhat under control.
Last week we mentioned this report would hold a deeper discussion surrounding planting intentions this year. While it’s too soon to set any concrete expectations, news from China on a large soybean crop is sending signals to U.S. producers that rice will be the crop of choice in 2024. If that happens, it is likely that we will see an acreage increase above this year in all states (except maybe Texas given water availability). Last year, the USDA showed total U.S. rice planted at 2.894 million acres. This year, it is likely that production will meet or exceed 3 million acres of rice sewn, pending any other large announcements from China. The largest gains are likely to come from Mississippi and Arkansas. This bodes well for healthy production and a more consistent supply for U.S. exporters.
The most recent USDA Grain: World Markets and Trade report has an excellent piece on Western Hemisphere rice trade, and more specifically, paddy exports in the region. The Western Hemisphere accounts for just under 13% of global imports, and about one-third of those imports are paddy. Up through 2021, the U.S. has consistently held well over 50% of total paddy exports, but last year’s short crop and inflationary protection policies to our primary export partners dropped our share down to about 40%. We are already seeing a resurgence in the 2023 numbers up to the 50% range and looking to move higher once again. Rice production for 2023/24 is projected at 36% higher than the previous year, while paddy exports are forecast at 82% higher. This lends credibility to the opening statement that unless export pace slows, the U.S. will run out of rice.
In Asia, the significant news is the fulfillment of a large Indonesian tender that was filled largely by Vietnamese suppliers. Thailand was left out in the cold with an ensuing price drop in an attempt to be competitive. Thailand has been leading the charge with high prices, last week recording as high as $660 pmt, but after this week and not being awarded any business to Indonesia, prices have fallen to as low as $625 pmt. Vietnam has held steady in the $640 pmt range, as India remains absent from the open market.
The weekly USDA Export Sales report shows net sales of 110,600 MT this week, up noticeably from the previous week and up 89% from the prior 4-week average. Increases primarily for Nicaragua (25,000 MT), Canada (20,300 MT), Japan (17,200 MT), Honduras (15,000 MT), and El Salvador (14,800 MT), were offset by reductions for Venezuela (1,100 MT). Exports of 77,700 MT were up 24% from the previous week and 15% from the prior 4-week average. 
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