Agricultural and Food Policy
 Agri Outlook
Radio
Number 93
Outlook: Long Grain Rice Outlook (4:26 minutes)
Audio/Video Script:
Dr. Bobby Coats
Extension Economist
University of Arkansas, Division of Agriculture
I continue to see more positives than negatives in the U.S. and global
economy, which will continue bullish for commodities in general and bullish for
rice specifically. I’m Bobby Coats Extension Economist University of
Arkansas Division of Agriculture.
USDA’s October rice projections showed the following:
- First, USDA raised their 2007 U.S. long grain
rice production projection from 138.2 million cwt in September to 142
million cwt. This is the lowest U.S. long grain production since 2000, but
still the 8th largest on record.
- Second, Total long grain supply was increased
from 181.8 million cwt in September to 185.5 million cwt. which is the
lowest since 2003, but still the sixth largest on record.
- Third, U.S. long grain exports were raised from
77 million cwt in September to 83 million cwt, which is above the last
marketing period’s 72.6 million cwt and if achieved would be the sixth
largest on record.
- Fourth, U.S. long grain total use is projected at
172 million cwt the 3rd largest on record and above the 2006/07 marketing
period’s 164.6 million cwt.
- Fifth, U.S. long grain ending stocks are
estimated at 13.5 million cwt significantly below the previous marketing
period’s 28.5 million cwt. and more in line with a normal ending stocks
expectation.
Turning to the price outlook for long grain rice, the U.S. Federal Reserve’s
rate cut was bullish for continued global growth and this is bullish for most
commodities including food, feed, and fiber. I expect the Fed to cut the
interest rate once again at the end of October to assure global growth and
momentum remains strong. Reducing interest rates should weaken the dollar and be
inflationary. Inflationary expectations should attract commodity speculators and
be bullish for commodity prices including the food, feed and fiber commodities.
By October 19, 2007 many of the equity and commodity markets appear to be
correcting. For these markets price weakness may be around for the next 2 to 7
weeks with weakness or strength varying by market.
A key question remains has wheat put in a top given its huge price run-up or
will it push back up beyond its previous high. Soybeans, corn, and cotton appear
to also be pulling back before moving beyond their previous highs. As with corn,
soybeans and cotton I continue to expect rice will have some price weakness
before moving higher. As we have stated previously both cotton and rice are
extremely expensive crops to produce, so producers will be seeking pricing
opportunities that will allow their operations to cash flow. U.S. producers
continue to remain at a significant disadvantage in the milled rice export
market.
On October 31, 2007 the U.S. Federal Reserve will announce their next
interest rate move. This will give an idea of their expectations about growth
and inflation. My expectation is that the Fed will remain concerned about
maintaining growth and momentum and will lower the interest rates and this move will
be bullish for global growth; therefore I continue to see more positives than
negatives in the U.S. and global economy, which will continue bullish for
commodities in general and rice specifically.
Commodities continue to display significant price volatility and uncertainty,
due to the dynamics of the global economic setting; therefore I continue to
believe professional marketing assistance is advisable from co-ops or individual
marketing professionals.
This has been Bobby Coats Extension Economist University of Arkansas Division
of Agriculture.
Source:
http://www.aragriculture.org/agfoodpolicy/Rice_Commentary/2007/October222007.pdf
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