Agricultural and Food Policy
 Agri Outlook
Radio
Number 104
Arkansas’ Rice Situation and Outlook, Presented 2007 USA National Rice Outlook Conference, Orlando Florida – December 2-4, 2007 by Bobby Coats – Professor & Extension Economist, University of Arkansas Division of Agriculture (3:59 minutes)
Audio/Video Script:
Dr. Bobby Coats
Extension Economist
University of Arkansas, Division of Agriculture
This is Part 4 of Arkansas’ 2008 Rice Situation and Outlook. I’m Bobby Coats
Extension Economist University of Arkansas Division of Agriculture.
Slide 29 - Inclosing
The global economic setting is filled with uncertainty but global
strength is more likely than not to continue the global bull market for
commodities.
The challenges of this global economic setting are inflationary and this
is bullish for commodities.
The larger price trend in rice, soybeans and feed grains
currently continues up, but near term global weakness could be
problematic.
I expect global growth even with significant road blocks
will be reasonably strong over the next 2 years which implies continued
strong demand for commodities. Sustainable global growth also implies
pricing opportunities remain for the 2007 and 2008 row crops.
Recognize that global commodity markets are extremely
liquid, volatile and dangerous as speculators move in and out. Expect
the unexpected because markets will correct and markets will top.
Navigating price trends in a world with large amounts of liquidity is
difficult, for nonprofessional marketers I recommend professional
marketing assistance through co-ops or other marketing firms or
individual marketing professionals.
Soybean and feed grain alternatives could become a bigger
issue between now and rice plantings if rice prices don’t stay
competitive. That is why I choose a bullish rice scenario and a bearish
rice price scenario for 2008’s Arkansas rice harvested acreage
projection.
Slide 30 [Bar Chart] – In 2008 my all rice harvested acreage
expectation under Scenario No. 1, my bullish view:
- Assumes continued strong global growth and a continued bull
commodity market
- Bullish global rice fundamentals
- Global weather issues are increasingly probable
I continue to expect more weakness than strength in the dollar couple these
factors with continued strengthening rice prices or adequate rice pricing
opportunities and Arkansas rice producers will be harvesting 1,242,000 plus all rice
acres in 2008, which compares to 1,180,000 acres in 2007.
Scenario No. 2, my bearish view, assumes the impact of farm bill uncertainty
or a farm bill that increases Arkansas rice producers’ risk exposure and reduces
their ability to cash flow, especially coupled with staggering production cost
increases of recent years. Now consider the possibility of soybean and feed
grain prices moving toward or pasted record highs, and the lack of
rice price bullishness and Arkansas rice producers could plant
926,000 or fewer acres in 2008.
Slide 31 [Map of Arkansas] – Finally, my expectation is that commodity prices in 2008
have the potential to provide Arkansas row crop producers outstanding pricing
opportunities on the row crops produced on Arkansas rice farms in 2008.
This has been Bobby Coats Extension Economist University of Arkansas Division
of Agriculture.
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