Agricultural and Food Policy
 Agri Outlook Radio
Number 206
Questions on Rice Situation and Outlook (4:22 minutes)
Audio/Video Script:
Robert Coats, Ph.D.
Extension Economist and Professor
University of Arkansas, Division of Agriculture
I'm Robert Coats Extension Economist University of Arkansas Division of
Agriculture.
Questions on Rice Situation and Outlook
Is USDA's estimate of long grain rice total supply overstated?
Once an accounting determination can be established from this year's harvest
on the total U.S. long grain rice production, then we will have a better
estimate of total supply for the 2008/09 marketing year. I expect data to show a
tight but adequate 2008/09 U.S. long grain rice supply, one that is supportive
of USDA's current long grain 2008/09 rice price projection range of $15.00 to
$16.00 per cwt.
Presently, what would be supportive of rice prices above USDA's 2008/09
projection of $15.00 to $16.00 per cwt?
If 2008 corn and soybean production comes in below expectation, then corn
prices could break out to the upside from their current downward trend pattern,
and soybeans would continue strengthening to the upside. Bullish corn and
soybean fundamentals would be supportive and bullish for rice prices.
What about the long grain rice price outlook for the 2009 rice crop?
The financial crisis and slowing global growth are problematic for the
2009/10 long grain marketing period rice price outlook. Major rice producing and
consuming countries have nightmarish memories of the 2008 scattered global food
riots and concerns about global rice supply and availability. These concerns
will:
- First, keep major global rice producers focused on maintaining
adequate domestic and exportable supplies; and
- Secondly, keep importers focused on assuring themselves an adequate
available supply of rice.
This is to say that governments are more than willing to intervene to
maintain adequate supply and meet traditional export commitments and
this tends to be bearish for global rice prices.
On the bullish side for the 2009/10 period consider the following for U.S.
long grain rice price outlook:
- My present expectation is tight U.S. long grain rice ending stocks
for the current marketing period that ends July 2009; next
- Weak 2008 U.S. long grain yields by some producers will discourage
the return of these acres to production in 2009; next
- Expected high cost of production will likely restrain U.S. 2009
rice planting; next
- Uncertainty about price outlook coupled with rice producers'
overall expected risk exposure could easily reduce acreage; and finally
- Hurricane impacts along the gulf coast will have an impact on 2009
long grain rice planting.
These are a few factors that could cause U.S. long grain rice
acreage to pull back, reducing 2009/10 production and provide 2009/10
marketing period price strength.
This has been Robert Coats Extension Economist University of Arkansas
Division of Agriculture.
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