Rice: A Look Into The Near Future

RICHARD E. HICKS

OCEAN SPRINGS, MISSISSIPPI

This past week I spent a very enjoyable hour or so talking to a producer from California. It was very enlightening to speak with someone from that state. California is a place that pretty much has all the amenities climate, natural resources, infrastructure population etc. What I took away from the conversation is California producers have the same issues that face farmers from all parts of the country, except in California the issues appear to be on steroids. Fascinating how government makes every effort to stand in front of the market economy in the name of some prevailing ideology. Well enough of my political editorial. This treatise is a look at the world production acreage and, of course, a brief outlook at the potential for the future.

In past articles we have covered some of the recent events and the impact they have had on the markets or rather the lack of impact. The war in the Middle East in other words the air campaign in Iran has had, in my humble opinion, a rather lackluster effect of our grain markets. Historically, when oil and gas, and the precious metals are on the prod, the impact on our grain markets is a positive. This time, it appears this is simply not the case. This leaves us with the usual suspects, weather, acreage and demand.

First let us take a trip down memory lane to 1798. Please bear with me on this one as this little econ lesson is being done from memory in my misspent youth when I studied a bit on economics.

Thomas Malthus was a well-known British expert on nearly every subject, but is best known for his theories on population growth, famine, pestilence and a host of other subjects. Malthus postulated a simple theorem. Population grows geometrically and food production increases arithmetically or linearly. In other words, food production increases 1,2,3,4,5 population increases 2,4,6,8,10. This, if it had been true, would have led to a world-wide famine many years ago. Regrettably, old Tom had not been exposed to the concept of modern technology. This fact is a shortfall in his ideas. Supply wise we are caught up in a cycle of increasing world production and a larger pile of rice, something Malthus could have never imagined.

Now a look at the real world. US rice acreage is expected to decline about 27% from last season two million plus. a reduction of over a half of million acres. I believe only California is expected to remain at 2025 levels. This sounds positive to price but we are not even the tail of the dog when it comes to the global tally sheet. On the positive side according to the USDA Global trade is expected to rise to a record high of 62.8 million tons in 2026. Nothing but good news there, as any increase in trade is a plus.

Global rice production 25/26 is projected to be 541.3 million metric tons, a small increase from last season. Global ending stocks stand at about 191 million tons. Another small increase.

Domestically, Ali rice supply is expected to decrease by about one million (cwt). This small decrease at 47.7 is still the second largest on record, behind last season’s 49.3. On another positive note Japan has committed to increase the amount of US rice imports. I believe something that occurred as a result of some unpopular trade negotiations.

On the homefront estimates vary but it appears acres line up as follows CA 500,000/525,000, AR 900,000/925,000, LA 375,000/425,000, MO 165,000, MS 95,000, TX 115,000 acres. These estimates point to a significant reduction in planted acres again, higher cost are to blame but these estimates have not changed much since the before the Middle East crisis. So my guess the is the cause is more of a political statement than fact.

On the world stage India is expected to be the largest rice producer in 2026 at 152 million tons. This shadows China who has been the largest producer for some time. China will still be a top tier player with production estimated to be 145 million tons. Sales wise, India is now expected to be the top exporter as well. They are expecting to capture between 40% to 45% on the world export market. Looking at the remaining players in the top five Bangladesh is expecting a crop at about 37 million tons. Indonesia stands in fourth place at 34 million tons with Vietnam taking the fifth spot at around 27 million tons. These are daunting numbers and only go to underline the uphill climb that face US producers. Looking at another player I have been following because it looks to me to be a mover Pakistan is hoping to produce 9.7 million tons a small decrease even with a bump in planted acres.

Overall as we head into the second half of the year very little seems to have changed from last season. Prices have improved a bit but not enough in my humble opinion. Given the small changes in the global tally sheet. I would not expect to see anything new on the domestic front. The Asian countries will vie for the top spots in production as we can only sit on the sidelines and think “What if”.

RICHARD HICKS IS THE MANAGING DIRECTOR OF THE R.E. HICKS GROUP LLC AN NFA REGISTERED INDEPENDENT IB.

I can be reached at 618-301-2244, 618-363-0252 sat phone 1-254-219-7336.

Note: Past Performance Is Not Indicative Of Future Results.