World rice ending stocks decline FOR THE first time in six years, world rice consumption outpaced production in 2000, leading to a corresponding drop in world ending stocks. However, a large global rice supply - most of which is in India and China - continues to pressure rice prices, according to a report by World Agricultural Outlook Board economist Andrew Aaronson, speaking at the USA Rice Outlook Conference in Las Vegas.
The decline in world ending stocks was just about the only good news heard by U.S. rice producers, who have seen rice prices in free fall since April of 1998. Today, the world market price for long grain rough rice at $3.40 per hundredweight is the lowest in 14 years, while the price for medium and short grain rice is $3.28, the lowest since 1987.
Aaronson said global rice production in 2000/01 is projected at nearly 398 million tons, down about 5million tons from last year's record. While a production shortfall in China was responsible for about half of the decline in production in 2000, the economist noted that for the past several years, global consumption has been growing at a slightly faster rate than the growth in world production.
He said the slower rate of world production was due to a flattening out of yields.
While there has been an increase in global trade, a growing percentage is supplied by foreign rice, Aaronson noted, particularly from Thailand, Vietnam and China. In 2001, U.S. exports are projected at 2.75 million tons, unchanged from 2000. Meanwhile China, Thailand and Vietnam together are projected to export 13.8 million tons, up 13 percent from 2000 and a four-fold increase since 1981.
He added that weather around the world and how India decides to deal with its burdensome stocks are important keys to future price movement. Here's a closer look at major importing and exporting regions.
Asia - Production in this region is expected to fall because of a drop in China's crop. Asia has run a production surplus each year since 1987/88, the year of the last widespread poor monsoon in south Asia and southeast Asia.
Much of the rice trade in Asia is sourced from other Asian nations.
Africa - In the 1990s, rice consumption grew at a faster pace than the increase in production. The gap is growing at an average annual rate of almost 6 percent and totals 4.7 million tons in 2000/01. Africa accounts for 21 percent of world trade at a projected 5.2 million tons in 2001.
Europe/Former Soviet Union - A good market for U.S. rice. Imports were growing at an average annual rate of 4.8 percent during the 1990s. The United States exported about 422 thousand tons of rice, 15 percent of total U.S. rice exports in 1999/2000. Area in rice production is estimated at about 800,000 hectares, down 11 percent from a year earlier and a decline of 28 percent from the peak in 1988/89.
Middle East - Consumption is growing faster than production at an average annual rate of 3.6 percent. Rice production in 2000/01 is down 19 percent from a year ago and down 30 percent from 1998/99. The Middle East accounts for about 19 percent of world trade at 4.7 million tons.
Latin America - A growing market for rice, although U.S. exports to the region dropped 26 percent in 1999/00. During the past two marketing years, consumption has exceeded production. That gap totaled 1.7 million tons in 2000/01.
Latin America accounts for 11 percent of world trade at about 2.8 million tons, up slightly from 2000 and 1999, but down 700,000 tons from the high in 1998.
China - Rice production for 2000/01 is projected at 136.5 million tons (milled basis), down 1.8 million, or 2 percent, from 1999/2000 and a decline of 3 percent from the record 1997/98 crop. This year, China has suffered one of the worst droughts in 20 years, damaging about 31 million hectares of summer and autumn crops mainly in north and northeastern China.
The drop in rice production over time is due entirely to a decline in area. China's rice stocks have declined as production is reduced. China holds about 40 percent of the world's rice inventory. Most of China's stocks are of low quality long grain rice.
Indonesia - The country's goal of maintaining rice self-sufficiency has stalled. Increases in consumption have outpaced the increase in production since the early 1990s, resulting in large imports and a severe draw-down in stocks. Area in rice production has been stagnant. Average yield has not grown since the early 1990s. Imports in 2000 are estimated at 2 million tons, down nearly 2 million from 1999 and a reduction of two-thirds from the peak in 1998. Imports in 2001 are forecast at 3 million tons. Ending stocks in 2000/01 are projected at 1.5 million tons, down 37 percent from 2000. The stocks to use ratio of 4.2 percent represents 15 days of consumption.
Philippines - Similar to Indonesia. Growth in production not keeping pace with growth in consumption requiring large imports. Since 1995/96, the gap between consumption and production has averaged near a million tons. Little or no growth in production. Yield growth has slowed. In recent years, the Philippines has been hit hard by abnormal weather.
Japan - Rice production has been declining due to domestic policies that encourage the diversion of rice area out of production. Area has fallen 20 percent since 1994/95. Imports in 2001 are projected at 775,000 tons compared to 750,000 in 2000 and 633,000 in 1999. The levels are based on minimum access obligations under the GATT agreement. Despite a reduction in production, Japan's rice stocks remain high.
Iran and Iraq - Production in 2000/01 is projected at 1.35 million tons, down 21 percent from 1999/2000 and a decline of one-third from 1998/99. Because of the shortfall, imports are projected at 2.4 million tons. Iraq purchases most of its rice from Vietnam, Thailand and China. Iraq purchased 30,000 tons of U.S. rice in July as part of the UN's oil-for-food import program. Iraq last purchased large quantities of U.S. rice in 1989 when it imported about 390,000 tons representing about 87 percent of its total needs.
Mexico - The top U.S. export market in 1999/00 taking about 373,000 tons of rice on a milled equivalent basis, with most of it on a rough basis. Domestic production has not kept pace with domestic consumption. Mexico is projected to import 425,000 tons of rice in 2001, up 6 percent from 2000.
India - Growth in rice production continues to outpace the growth in consumption resulting in a huge buildup of stocks. India has had 13 straight years of normal to near normal monsoons resulting in mostly bumper harvests. India's ending stocks reached a record 17.6 million tons in 2000/01.