US Rice Production Reaching Boiling Point

US rice growers will continue to face lower prices in the 2016/17 growing season, as stocks of southern medium- and long-grain rice are at elevated levels, while total production will be at, or near, record levels.

picture of rice kernel

RaboResearch’s latest industry note, titled ‘Reaching Boiling Point: U.S. Rice Producers are Feeling the Heat of Global Competition’, takes a close look at current industry developments. Here are a few highlights from the report:

California-centric Calrose is under water

In the long term, Calrose will continue to be a premium product, with demand coming from Japan, South Korea and eventually China. As California continues to be taunted by current and future droughts, some producers with a higher cost of production will sell water in lieu of producing rice.

A price reset is coming for southern medium-grain rice

Reduced acreage of southern medium-grain in the 2016/17 crop year will allow growers and processors to work through their abundant storage, allowing prices to return to more normal levels in the next few years.

Producers need to play the long game in long-grain

In 2016, an over 450,000-acre increase in long-grain rice acres in Arkansas, Mississippi and Texas will put additional pressure on long-grain prices, and this is likely to last for the next two to three years. 

In the long term, as foreign competition increases, higher-cost US producers will be unable to compete and will drop out of rice production. Southern rice processors, however, will benefit as they focus on quality and direct marketing to specific consumers and regions.