Global Market Prospects for U.S. Long-Grain Rice for the Upcoming Marketing Year

According to USDA 2023 Prospective Plantings report, the long-grain rice planted area is projected at 1.96 million acres, a 9% increase relative to 2022, but still slightly below the 5-year average (2.0 million acres). At trend yields of 7,299 pounds per acre, we could expect a 14.6 million hundredweight (cwt) or 11.4% increase in production relative to 2022.

With the expected increase in production, the pressure will be on exports to perform well and help keep market prices stable. While the share of long-grain exports to total use has been decreasing steadily since 2015, exports still accounted for between 41% and 48% of total long-grain rice use during this period[1]. The short 2022 U.S. long-grain crop (on top of an already short 2021 crop) puts extra pressure on farm prices, which have reached record levels in 2022/23 (USDA estimates an average farm price of $16.90/cwt).

So far, 8 months into the 2022/23 marketing year, export performance has been lagging with only 34.9 million cwt (rough basis) of long-grain rice exported, compared to an average 52.4 million cwt during the same period in the last 5 years. Paddy rice exports are down almost half relative to last year, mostly due to a sharp 71% decrease in exports to Mexico and a 38% decrease in exports to Central America (Figure 1), where Mercosur (primarily Brazil) has displaced the U.S. as the top supplier. Exports of milled rice are showing a good performance despite the lack of price competitiveness, which indicates the importance of other factors aside from price. For example, the U.S. negotiated 250 thousand metric tons of milled rice exports to Iraq, a market in which U.S. rice is clearly not price competitive.

The expectation is that a larger 2023 U.S. crop and the smaller 2022 Brazilian crop (7.9% smaller than in 2021) could provide the incentives for the U.S. to reclaim at least part of the Mexican and Central American markets. However, other aspects related to (1) milling and culinary quality differences vis-à-vis Mercosur rice, and (2) the prospects of policy changes in Central America aimed at extending trade preferences to competing countries similar to those given to the U.S. under CAFTA-DR, may hinder the prospects for U.S. rice in these Latin American markets.

Figure 1. Exports of U.S. long-grain rice to Mexico and Central America in the first eight months of the last seven marketing years (rice marketing year: August-July).

[1] USDA includes imports of fragrant (jasmine and basmati) rice in the rice supply and use estimations, but they are removed in this analysis as fragrant rice is a different market segment than long-grain rice.

Durand-Morat, Alvaro. “Global Market Prospects for U.S. Long-Grain Rice for the Upcoming Marketing Year.” Southern Ag Today 3(16.4). April 20, 2023. Permalink