The drastic reduction largely was the result of reduced planted and harvested area as rice (as well as corn and sorghum) lost acreage mainly to soybeans and cotton due to relative prices when planting decisions were made earlier in the year. Slightly better national average rice yield provided some offset to lower acreage.
Rice prices were declining in March while soybean prices were rising, Nathan Childs, PhD, an agricultural economist with the U.S. Department of Agriculture said earlier in the year, and U.S. rice carryout for 2017 at the time was forecast at more than a 30-year high.
The USDA in its November Crop Production report estimated 2017 U.S. rice production at 178.382 million cwts, down 5% from its initial forecast in August, down 20% from 224.145 million cwts in 2016, down 13% from the recent five-year average and the lowest since 1996. A record crop of 243.104 million cwts was harvested in 2010. Harvested area was estimated at 2.391 million acres, down 706,000 acres, or 23%, from 2016 and the lowest since 1987. Average yield based on Nov. 1 conditions was estimated at 7,461 pounds per acre, up 3% from last year.
Harvested area for rice, corn and sorghum declined a combined 2.103 million acres in the six rice states of Arkansas, California, Louisiana, Mississippi, Missouri and Texas, while harvested area for soybeans and cotton increased a combined 2,015,000 acres, according to USDA data.
Some rice acreage losses also resulted from heavy rains and flooding related to Hurricane Harvey in Texas and Louisiana. Although much of the crop was harvested when the hurricane hit, there were significant losses to the second harvest, known as the ratoon crop, the U.S. Department of Agriculture said in its November Rice Outlook. Additional acreage was lost to flooding earlier in the year in top-producing Arkansas, which accounted for about 60% of the total reduced harvested area.
The nearby January rough rice future closed at $12.42 a cwt on Nov. 24, up 29% from a year ago and up 20% from the first of the year but below September highs above $13 a cwt. Rice futures last week neared $13 a cwt in the July 2018 contract and didn’t drop below $12 until the new 2018 crop November contract.
In its November World Agricultural Supply and Demand Estimates report, the USDA forecast the average farm price of all rice in 2017-18 (August-July) at $12.50 to $13.50 a cwt, with the midpoint up $2.60 a cwt, or 25%, from $10.40 a cwt a year earlier and compared with $12.20 a cwt in 2015-16.
The USDA in its WASDE forecast carryover of rice on Aug. 1, 2018, at 29.9 million cwts, down 35% from 46 million cwts in 2017 and the lowest since 2007-08.
Unlike wheat, corn and soybeans, the United States is not a major producer of rice on the global stage, missing the top 10 by a couple of slots. Still, the United States exports about 55% of its rice production (similar to wheat and soybean export percentages). But the United States also imports a substantially larger share of its rice supply (about 10% of total supply and about 20% of domestic consumption) than the other commodities mainly due to the classes of rice produced and the varieties desired by consumers. The USDA forecast U.S. rice imports in 2017-18 at a record 24.5 million cwts.
Despite the sharp decline in U.S. rice production, global supplies are ample after record outturn of 486.57 million tonnes in 2016-17. Though forecast production for the current year is down 1% from last year at 481.20 million tonnes, 2017-18 ending stocks at 141.51 million tonnes are the highest since a record 146.7 million tonnes in 2000-01.
Looking ahead, the USDA in its preliminary long-range projections released last week, forecast 2018 U.S. rice planted area at 2.9 million acres, up 17% from 2017, and harvested area at 2.878 million acres, up 20%, though both still are below 2016 acreage. Production next year was forecast at 220.2 million cwts, up 23% from 2017. The average farm price was forecast to decline 5% to $12.30 a cwt in 2018-19.