It has been a significant week in the rice industry with multiple USDA reports being issued and notable market reactions as a result.
- In the cash market, farm prices have made very few adjustments since the last report, and the USDA World Market Price has held constant for yet another week.
- Export sales were slightly off, while vessel loadings continue to keep pace against outstanding commitments.
- Asian pricing has been generally stable as well.
- The futures market has seen the majority of the movement in the industry this week as a result of the combined reporting late in the week.
USDA released its semi-annual acreage report, along with its quarterly rice stocks report today with some notable results for rice. According to the stocks report, rough rice in all positions totaled 64.3 million hundredweights as of June 1. This figure represents a 10 percent reduction from June 1 of 2015.
Long grain accounted for 56 percent of the total stocks, and medium grain represented 42 percent of the total. The remaining 2 percent was made up of short grain holdings. On-farm stocks were reported at 7.97 million hundredweight with the remaining 56.3 million hundredweights being held off farm.
Milled rice in all positions was reported at 6.92 million hundredweight, which is a 2 percent increase from the 2015. 4.53 million hundredweights of this volume consisted of whole grain rice, while the remainder consisted of second heads, screenings, and brewers rice. The acreage report forecasted 2016 acreage to have increased by 23 percent over 2015 plantings.
By class, long grain comprised the greatest increase with a 31 percent boost in acreage to 2.46 million acres planted. Short grain experienced a 24 percent increase in planted acres from 2015 to 46,000 acres nationally, while medium grain was virtually unchanged at an estimated 702,000 acres.
The primary reason cited in the report for the increase in total rice acreage was the lower prices of competing commodities during the planting window. The truly interesting part of the acreage report was not how it compared to 2015, but how it measured against the predictions of the prospective plantings report issued on March 31.
As compared to the prospective planting report, total long grain acreage increased by 12,000 acres nationally with gains in Louisiana and Missouri (30,000 and 10,000 acres respectively) that were partially offset by losses in Mississippi and Texas (20,000 acres and 10,000 acres respectively).
Medium grain posted significant acreage gains of 121,000 acres, primarily in California. Meanwhile, short grain acreage increased by 15,000 acres in California as well. The net result was a 148,000 acre increase over the previous estimate.
Given the many windows in which growers were able to make last minute changes this year (due to prevented planting, weather related problems, etc…), it was widely anticipated that a large portion of corn and rice acres would transition to soybeans. The USDA disagreed.
The resulting market adjustments have thrown tremendous levels of volatility into the marketplace and will have lasting effects long after the current crop is harvested and stored for the season.