Without sizable acreage decreases 9 The yin and yang and demand increases, prices could Shorter supplies have shorn up the soften for the 2021 crop.market, but increased 2018 planting

Without sizable acreage decreases and demand increases, prices could soften for the 2021 crop

By Kurt Guidry

Tight stocks and favorable demand have helped support rice prices for much of 2020, which saw a large increase in rice acres and the potential for drastically higher production and supply levels. Historically, this type of situation would result in heavy downward pressure on prices.

While 2020 prices were lower than levels experienced in 2019, the price reduction was not nearly as significant as might have been projected. Weather concerns in key growing states likely helped to keep some risk premium in the market, and the increase in feed grain and oilseed prices has likely provided some spillover support to rice. But the biggest factor in helping to keep prices supported and relatively stable in 2020 were the tight stocks entering the harvest season.

Beginning stocks for the 2020-21 marketing season were the lowest since the 2003-04 marketing year. That, along with better-than-expected domestic and export demand, helped to support rice prices despite the more than 22% increase in total rice production.

Looking to 2021

The question that remains is whether prices will continue to be supported as we move through the 2020-21 marketing year and into the 2021 production season. Currently, prices have been relatively stable around the $20-per-barrel ($12.35 hundredweight) level. However, examining the overall supply-and-demand picture reveals that ending stocks for the 2020-21 marketing year are projected to increase by 77% from the previous year for all rice and by more than 120% for long-grain rice.

With those types of increases projected in stock levels, historically the expectation would be for downward pressure on prices. The market has been able to resist this downturn in prices, in part, due to demand.

Rice purchases to cover domestic demand along with relatively strong long-grain rough-rice exports have helped to prevent any significant downturn in prices to this point. Long-grain rough-rice exports are more than 12% higher than the previous year.

This has been mostly driven by Brazil, which has purchased more than 120,000 metric tons to this point in the marketing year versus none last year. With the increase in supplies and stocks, the market will need to continue to find new demand to support prices as it continues through the marketing year.

Unfortunately, where that new demand will come from is difficult to see. It appears that the purchases from Brazil may begin to slow significantly as there are no sales currently on the books. While there have been some rumors of a potential sale to Iraq, it has yet to materialize.

Increased production and supplies by competing export countries have helped to bring down their export prices, which will likely make it difficult for U.S. rice to find additional market share. By most accounts, short-term needs for the domestic market have also likely been met at this time, reducing the urgency for domestic users to source supplies.

6

VICKY BOYD Given current price levels, it is difficult to see a drastic reduction in total rice acres.

Holiday doldrums

All of these factors, along with the normal downturn in activity associated with the holidays, has kept the market quiet over the past several weeks, and it will likely continue to remain so over the next several weeks. While higher feed grain and oilseed prices may provide some spillover support to rice prices, it will take some additional positive demand-side news to keep prices supported once the market starts to gear back up after the holidays.

What’s in store for 2021?

Looking to 2021 production shows a mixed bag of factors. On one hand, total domestic stock levels to start the 2021 production and harvest year will be significantly higher than the previous year. While not up as significantly, world stocks are also projected to be higher.

One thing that could help offset those larger stock levels would be lower acreage and lower overall production in 2021. Higher feed grain and soybean prices could help pull some acres away from rice.

However, given current price levels, it is difficult to see a drastic reduction in total rice acres. In its baseline projections released in November, the U.S. Department of Agriculture estimated nearly a 400,000-acre reduction in rice acres for 2021, with most coming from long grain.

That large a decrease could offset the larger beginning stocks levels and keep prices around the $20-per-barrel range, assuming stable demand. As mentioned, it is difficult to see that large a decrease in acres. A reduction of only about 200,000 acres would put supply and stock levels that — without some type of increase in overall demand — would likely pressure prices down into the $18- to $19-per-barrel (low to high $11 cwt) range. 

Dr. Kurt Guidry is Southwest Region director and Extension economist with the Louisiana State University AgCenter in Crowley. He may be reached at KMGuidry@agcenter.lsu.edu

New Horizon Ag Clearfield® Varieties Fit Farmer Needs for Performance

Bernie, Missouri, farmer Zack Tanner has seen a lot of positive developments in Horizon Ag Clearfield® rice varieties over the years, thanks to ongoing university breeding and industry efforts. The latest rice variety releases available from Horizon Ag for the Clearfield Production System for rice, however, are particularly impressive with new varieties like CLL16, CLL17 and last year’s CLL15 pushing yield potential significantly higher while also offering advantages like increased blast resistance and high milling quality. “I think this new generation of Clearfield varieties really lends itself to what farmers are looking for in the marketplace,” said Tanner. “The varieties provide very good, affordable options for higher-yielding rice. CLL16, for instance, has the potential to produce hybrid-type yields at a lower seed cost. And having increased blast resistance really helps them with farms west of the (Crowley’s) Ridge.”

Zack Tanner (right) with Jason Satterfield, Horizon Ag District Field Representative, inspecting field of CLL16, near Bernie, Missouri Tanner, who also is president and co-owner of Tanner Seed Company, has had a chance to see the newest Horizon Ag Clearfield varieties up close in his seed production fields, taking note of their agronomic characteristics along with how to best manage them to get the most out of their higher performance potential. “CLL16 is hands down my favorite Clearfield variety, ever,” said Tanner. “It had good vigor and tillered very well. It is a medium-season variety that made a very good yield, and the milling was great. We didn’t see any blast in it, it didn’t have any lodging and it does well at a low seeding rate.” A long grain Clearfield rice variety developed by the University of Arkansas System Division of Agriculture, CLL16 has shown excellent rough rice yields, averaging higher than Diamond in university tests. Its performance consistency, high milling quality and industry-leading blast resistance make CLL16 the complete package for many rice farmers considering seed choices for planting next season. Tanner said that his CLL16 conservatively cut 204 bushels per acre, dry, in 2020 without the levees being seeded. In 2019, Tanner’s CLL16 made over 240 dry bushels per acre. “That consistency is really important to farmers,” he said. “It’s a typical Arkansas-plant type, which is a little taller in height, and it is absolutely a good fit in Missouri and Arkansas. We were very impressed with it.” CLL17, an early-season, semi-dwarf long grain rice developed at the LSU Ag Center H. Rouse Caffey Rice Research Station, also stood out in Tanner’s fields in 2020. “CLL17 really grew off rapidly, had great vigor and grew to green ring stage faster than other varieties,” he said. “One thing that stands out is it is an efficient user of nitrogen. You might be tempted to apply more N because the plants have a lighter color, but a study showed its sweet spot was 90 total pounds of N. I would caution against using too much nitrogen because you are not going to get it to be dark green.” Although the variety is likely to be more popular further south, “it pressed a lot of buttons for being an attractive plant,” he added. Horizon Ag and LSU report that CLL17 has consistently out-yielded CL153, the top-planted Louisiana variety in recent years, in multi-year trials. It has solid ratoon crop potential and also features outstanding resistance to blast. In addition, it has proven to provide excellent milling yield and very good grain quality. Horizon Ag expects CLL17 to eventually become the leading Clearfield variety planted in Louisiana, surpassing CL153, based on its performance. Horizon Ag variety CLL15 was released in 2020 and was planted on a broad acreage across the northern Delta. Tanner had the variety on his farm two years prior to launch and said that based on how it yielded those two seasons he recommended it to many farmers in the area. “It has a great plant type, a shorter stature but not too tall or short,” he said. “It tillers extremely well, stands well and mills very well, and our yield two consecutive years was in the mid-190s (bushels per acre). What I really like about CLL15, in addition to its yield potential and blast resistance, is that all the crop was on top and the combine did not have to harvest a lot of material. I had been planting both CL151 and CL153, and we felt CLL15 was a great improvement over those varieties.” Tanner added that another Horizon Ag variety released in 2020, Provisia® rice variety PVL02, is beginning to win a place on more acres in the region. PVL02, which was available in limited supply in its initial year, proved to be a significant step change over the first Provisia variety, PVL01, in terms of yield and overall performance. PVL02 will be the primary variety offered by Horizon Ag for the Provisia Rice System for 2021. “We have more crop diversity and rotation options in this area, but you don’t have to go far to find where weedy rice and resistance are serious issues,” said Tanner. “The farmers who have planted Provisia rice here really like it. The difference in their Provisia fields and fields with weedy rice is like night and day. Provisia rice is another important tool for them.”

For more information, farmers can call 1-800-356-9033 or see their Horizon Ag Authorized Retailers.