Economist: Decreased production helps U.S. rice market improve

The U.S. rice market has improved because of decreased production that boosted prices, economists say.

“It’s definitely improved from where we were last year,” said Mike Deliberto, LSU AgCenter economist.

The long-grain price has improved by more than $1 a hundredweight, he said.

One reason for the increase was a decrease in U.S. rice production by 16% from 2018. Yields and harvested acres both decreased, Deliberto said, and that caused a decrease in supply, with ending stocks at 38% lower than last year.

The 2019 long-grain crop was the smallest in seven years, he said.

“That tightness in the market is price supportive,” Deliberto said.

Louisiana rice acreage, which totaled 415,000 in 2019, declined 4% from 2018, the smallest decrease among the southern rice-growing states, Deliberto said.

Arkansas acreage decreased by 430,000 acres, bringing its total to 1.1 million. The average U.S. rice harvest was 6,650 pounds per acre, he said, the lowest in three years.

Meanwhile, rice imports continue to increase.

“We are still seeing imports at 2% higher than they were last year,” he said.

And exports have increased slightly. All exports are still about 7% higher than last year.

He said the U.S. had lost market share in Mexico, the biggest buyer of U.S. rice, but a decline in Brazilian rice production provided the opportunity for the U.S. to regain some of that lost business.

Purchases by Iraq in 2019 helped prices, he said, but it’s uncertain if that country will become a consistent customer.

In 2019, Deliberto started writing a new monthly crop update sent by email that details international and domestic market developments for rice, corn, soybeans and cotton.

He also generates a quarterly ag policy newsletter to relay information about trade, changes in foreign labor policy and farm management tools. In the fall, he embarked on a statewide tour to explain the effects of the new farm bill.

In addition, Deliberto updated several decision-making tools to help farmers, including a rental rate evaluation program and a rice cash flow model. He also started an enterprise budget for farmers who use the row rice practice.

12/19/2019 9:25:52 PM
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