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2024 Rice Market Outlook

2024 Southern Crops Economic Outlook

Annual SAEA Meeting, Atlanta, GA

February 5, 2024

Ryan Loy, Ph.D.

Assistant Professor and Extension Agricultural Economist

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Key Takeaways - Rice

Despite more acreage (+122,000 acres), late planting and prevent plant had fewer indemnities in 2023 ($55.5 million).

Nitrogen fertilizer is down ~37% over 2023; other fertilizer is following this trend.

Seed prices are up over 2023

India’s exports have plummeted following a July 2023 ban on exports of non-basmati rice.

Domestic consumption is only increasing

Eastern Pacific El Nino year is poised to keep prices relatively higher.

China will reduce imports in 2024 from high global prices.

Global consumption > global production

Ending stocks have slowly reduced since 2021

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Grains Trade and Key Shipping Routes

Panama Canal drought has rerouted shipping to the Suez Canal.

Missile and drone strikes forced shipping companies to halt using Suez Canal.

Baltic Dry Index

January 22: $1,503 (~Average)

Source: Center for Strategic and International Studies

Panama Canal has also been at historic lows. Slowing shipping traffic for the western hemisphere.
The response to rising costs and wait times at the Panama canal, ships have rerouted to use the suez canal instead.
1/3 of all shipping traffic flows through the Suez Canal.
Recall that the Suez Canal was where the grounded shipping container halted global trade (2021).
Suez Canal passages are at 63 percent compared to the previous year, while Cape of Good Hope passages are up 70 percent.
The increase in ship diversions increases fuel and labor costs while decreasing the average amount of cargo traffic reaching its destination.
The Baltic Dry Index, which tracks the cost of transporting various raw materials provides insight into the macroeconomic impact of shipping delays. While the index spiked to above $3,000 in early to mid-December, the cost of shipping has dropped to $1,503 as of January 22, which is an approximately normal level.
The Baltic Dry Index (BDI) is an index of average prices paid for the transport of dry bulk materials across more than 20 routes
Members contact dry bulk shippers worldwide to gather their prices and they then calculate an average.1 The Baltic Exchange issues the BDI daily.
Insurance premiums for shipping has skyrocketed since Nov 2023. (0.5% - 0.7% of the total value of the ship).
ships with low cargo value, and a higher tolerance for risk, have deemed the trip worth making.

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U.S. Rice Production and Exports

Source: USDA-FAS

After two consecutive years of lower rice acreage, Arkansas farmers planted more than 1.4 million acres of rice in 2023. If typical trends hold, total acreage could decline in America’s largest rice state in 2024
Arkansas’ typical up-year, down-year cycle for rice acreage, and a significant improvement in medium grain plantings in Arkansas and California may have saturated medium grain markets.
California’s medium grain marketing efforts differ from that of the Midsouth as California has well-established, specialty markets, and Arkansas rice tends to be moved through the commodity markets.
Will the current fall 2023 rice bids of about $6.80 per bushel encourage more rice next year? What happens in soybeans may largely depend upon full ownership versus common share lease arrangements. “Profitability shifts in favor of soybeans in common share lease arrangements,”

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What’s Impacting the Markets?

Russia – Ukraine Conflict

Russia largest exporter of fertilizer (~$13.1 Billion).
Has Global Capacity Adjusted? (Kee et al., 2023).

India, Thailand, and Indonesia Drought

El Nino conditions and off-season production.
Thailand forecasted to have low surplus for exports.

India’s export ban on non-basmati milled rice (July 2023).

India likely to keep ban in place for election year.

August 2021 (invasion): Fert prices up 25% compared to march 2021.
accounting for 23% of ammonia exports, 14% of urea exports, 10% of processed phosphate exports, and 21% of potash exports
Fert and grain prices peaked in May 2022. Have steadily come down since
Alternative suppliers in Australia, EU, and Canada.
El Nino means higher pressure systems that are hotter and cause drought.
India, the world's biggest rice exporter and No.2 supplier Thailand are expected to see production from their off-season crops decline in the first quarter, while Indonesia, a leading importer, is still reeling from drought as farmers plant their crops.
In the absence of Indian rice exports, Thailand and Vietnam would be expected to account for a sizeable share of global rice deliveries, which will render trade prices sensitive to weather conditions in either market.
In response to the increasing domestic prices and exports, in 2023 the Indian government banned the export of non-Basmati white rice, imposed 20% duty on parboiled rice exports and fixed a minimum export price of Basmati at $950/mt

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Global Rice Production by Country

Source: USDA-FAS

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Global Rice Exports by Country

Source: USDA-FAS

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Global Rice Consumption by Country

Source: USDA-FAS

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With India’s implementa�on of the July 2023 partial rice export ban3, a significant shi� is underway in SubSaharan Africa’s rice supply chain. In the region as a whole, imports account for approximately 40 percent of total consump�on. Sub-Saharan Africa has become more heavily reliant on India for rice in recent years. Between 2019 and 2022, Sub-Saharan Africa’s annual share of rice imports from India rose from 31 to 66 percent due to compe��ve prices. Since 2018, India has reported directly expor�ng rice to 47 of 49 Sub-Saharan African countries. The excep�ons are landlocked countries Chad and Lesotho, which likely received transshipped Indian rice. Roughly half of India exports to the region headed to five countries in West Africa: Benin, Senegal, Cote d’Ivoire, Togo, and Guinea. The majority of rice shipped via Benin was ul�mately des�ned for Nigeria.

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Source: USDA-ERS

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Source: USDA-ERS

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Global Supply and Demand

Source: USDA-FAS

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Rice Input Price Outlook (UADA Budgets)

	2022	2023	2024	% Change (2023 - 2024)
Seed ($/ac)	$44	$43.92	$71.28	62.3%
Nitrogen (N) ($/lb)	$0.43	$0.40	$0.25	-37.5%
Phosphate (P) ($/lb)	$0.44	$0.45	$0.35	-21.3%
Potash (K) ($/lb)	$0.41	$0.41	$0.25	-39.0%
Herbicide ($/ac)	$144	$138.78	$135.89	-2.1%
Insecticide ($/ac)	$1.52	$3.01	$9.04	200.3%
Fungicide ($/ac)	$19.82	$24.10	$11.32	-53.0%
Diesel ($/gal)	$2.60	$4.50	$3.65	-18.9%

Source: University of Arkansas Enterprise Budgets

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Rice Scenarios (Total Expenses: $1,012.88)

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Thank You! �� Questions?

Ryan Loy

University of Arkansas
2301 S University Ave, Little Rock, AR, 72204
Office: 307L
rloy@uada.edu
(214) 642-9066

My Website:

Presentations, publications, etc.