Global rice stores reported down 14%

Global rice stockpiles are down about 14 percent from a year ago, the U.S. Department of Agriculture reported Tuesday.

Scott Stiles, an economist with the Cooperative Extension Service of the University of Arkansas' Agriculture Division, called the news "mildly supportive" of future rice prices and reiterated his view that it would lead to more acres of rice being planted in Arkansas in 2016.

"It's going to be an influence on what we plant this year," said Stiles, who has predicted rice acreage in the state could increase by 20 percent in 2016.

Commodity prices fell sharply in 2015, and some economists expect the downturn to last two or three years.

Rice prices did not get an immediate boost from Tuesday's report. Rice's March price was down 5 cents to close at $11.72 per hundredweight, or 100 pounds.

The USDA reported increases in global stocks of soybeans, wheat and corn, but prices for those commodities ended the trading day higher.

Robert Coats, UA extension agricultural economist, said the price increases likely were driven by traders looking for some good news on a day when stocks briefly turned lower and oil prices temporarily dipped below $30 a barrel.

"One day does not make a trend," Coats said. "It's going to be extremely hard to follow up."

The market for rice, in contrast, has been relatively stronger in recent weeks, he said, and has better prospects.

Global rice stockpiles, which represent supply in excess of demand, went from about 114.5 million tons in January 2015 to 98.9 million tons this January, according to USDA estimates.

U.S. rice stocks dropped from about 1.7 million tons in January 2015 to 1.45 million tons this January, the USDA said.

However, the USDA's estimates for both global and U.S. rice stocks this January were up slightly from the agency's December estimates, and Coats said those month-over-month increases could have contributed to Tuesday's drop in rice prices.

Arkansas is the largest producer of rice in the U.S.

Long-grain rice production in the U.S. is projected at 133 million hundredweight, the USDA said. That's up about 700,000 hundredweight, the USDA said. Long-grain rice is about 80 percent of Arkansas' crop.

Arkansas growers harvested about 1.1 million acres of long-grain rice in 2015, the USDA said. The average yield was 164 bushels per acre, down from 168 bushels per acre in 2014, the agency said.

Jarrod Hardke, extension rice agronomist, said the long-grain yield decline could be attributed largely to poor weather in June, which was unusually overcast and wet and stressed the crop. He said he expected the yield was actually lower, closer to 159 bushels per acre.

Hardke also noted that rice acreage declined from about 1.3 million acres in 2014 to about 1.1 million in 2015, in part because heavy spring rains prevented planting in some fields.

The USDA said it was raising its estimate of global production in 2016 because of larger crops in China, the Philippines and Mali, but said it remains at its lowest level in four years. Trade is expected to increase because of rising demand in Southeast Asia, the USDA said.

U.S. rice exports should increase 18 percent to about 3.9 million tons, the highest level in four years, on strong shipments to Latin America, the USDA said.

"Since August, U.S. exports have soared," the agency said. "Higher shipments to Colombia, Mexico, Haiti and Central America more than offset lower exports to Middle Eastern and African destinations such as Turkey, Iraq and Ghana. Demand for U.S. rice is expected to remain relatively strong to Western Hemisphere markets in 2016."

Business on 01/13/2016

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