Photo by Ryo Yoshitake on Unsplash
 

As of February 27, Delivery expectations against CBOT March rough rice futures were for 150 to 400 contracts. Registrations as of Friday also included 637 contracts for rough rice.

Among the top three most consumed foods in the world, rice is the primary food staple for more than half of the world’s population. The U.S. domestic production, however, according to the USDA World Agricultural Supply and Demand Estimates, is down from 227.5 million cwt in 2020/21, to 191.8 cwt in 2021/22 to a projected 164.3 in 2022/23. Declines in both the new and old crop years are attributable primarily to less planted acreage, with yield decreasing only slightly.

Likewise, global rice production in 2022/23 is expected to be 503 million tons, down 2% YoY. Downward revisions for Argentina, Brazil, Cuba, the European Union, and Vietnam more than offset upward revisions for Bangladesh, Sri Lanka, Thailand, and Uzbekistan. Global consumption and remaining use forecasts for 2022/23 are raised 1.1 million tons to 517.2 million tons, with Bangladesh, China, and Thailand accounting for most of the increase. The global ending stocks forecast for 2022/23 is lowered by 850,000 tons to 169.1 million tons, with China and India accounting for most of the reduction. Argentina reduced the production forecast based on a lower yield due to dry weather conditions and limited irrigation water. The yield was lowered by almost 4% to 6.48 tons per hectare, the lowest since 2009/10. Brazil also lowered the production forecast based on a reduced harvested area estimate. At 1.47 million hectares, the harvested area is 50,000 hectares below the previous forecast and the lowest since the

1940s. Production is projected to be the smallest since 2002/03. 

As a result of many local geographical harvest downgrades, the 2023 global rice export forecast is lowered by 200,000 tons to 54.2 million tons. The biggest drag is lower forecasts for Pakistan, Thailand, and Vietnam, which more than offset a stronger forecast for India. Export prices for most common brown rice varieties rose 2-3% in Vietnam last month, while prices in India rose about 10%. Over the past month, prices in Thailand for most grades of regular whole-grain milled rice also rose 2–3% MoM, mostly due to an increase in the value of the Thai baht during January. Trade prices for U.S. long-grain polished rice continued to rise over the past month, while California medium-grain polished rice remained at record highs.

Global rice production in 2022/23 is projected at 503 million tons (on a milled basis), roughly unchanged from previous estimates but more than 2% below last year's record level while posting the first annual decline since 2015/16. Global production was the lowest since 2019/20.

The slightly higher carryover estimate raised the forecast for total global supply in 2022/23 by 200,000 tons to 686.3 million tons, more than 2% below last year's record and the lowest level since 2019/20. This is the first decline in global rice supplies since 2004/05. 

2022/23 global consumption and remaining consumption forecast raised by 1.1 million tons at 517.2 million tons for the month, it was still 2.7 million tons below last year's revised record. Bangladesh, China, and Thailand account for most of the upward revision to global consumption and remaining use in 2022/23, more than offsetting reductions for Brazil, Indonesia, Mali, and Tanzania. According to the United Nations Food and Agriculture Organization (UN FAO), global rice consumption is projected to rise in the coming decade by 1.1% annually to 2031. The majority of the increasing consumption is attributable to rising populations in Asia, plus Africa increasing per capita consumption. 
 

Summary:

As it is observable for many other grains and softs lately, perhaps, with the exception of soybeans at the moment, the lowering harvesting resulting from gradually decreasing acreage, combined with gradually rising consumption account for the population growth in the most populous countries, makes medium-to-long-term rice prices forecast very straightforward and unequivocal. Overall global prices will be rising at least pro rata trailing food inflation (higher than core inflation) plus 3.1-3.5% cumulative sum of consumption growth plus global planting/harvesting deficit.

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