The rice market

While rice is the staple crop of Asia, most of the rice served in Asian restaurants in the United States is homegrown. “What keeps foreign rice out of the American market is quality,” explains Nathan Childs, a rice analyst with the Economic Research Service of the USDA. Most of the world’s production is classified as “rough rice,” but American consumers demand milled rice. The only exceptions are basmati rice, imported from India and Pakistan, and jasmine, which comes from Thailand. In the past decade, American farmers have started growing these varieties on a larger scale.

Generally, American farmers concentrate on long-grain varieties, planted in the South, primarily Arkansas, and short- and medium-grain rice, grown primarily in California. Long-grain goes into center-of-the plate applications, rice bowls and sides, while short- and medium-grain is used in sushi and “sticky rice” dishes. Recently, specialty varieties like black japonica, aromatic red rice and medium-grain brown rice have found their way from American fields into Asian kitchens.

Total U.S. supply for 2005-06 is projected at a record 275.9 million cwt (1 cwt=100 lb.), 3 percent larger than 2004, according to Childs. Of that, about 121 million cwt will be exported in both rough and milled form. Record supplies and competitive U.S. prices on the global market are behind this bullish export forecast. On the home front, however, the record supply is decreasing the season-average farm price to $7.30 per cwt, down from $8.08 a year earlier. Wholesale prices should remain on this lower end as we continue to work off the large supply.

The USA Rice Federation, a trade group, says that this fall’s hurricanes should have little impact on availability and pricing. But the USDA’s Childs feels that quality may be effected—the winds and rains bent the crops, and milling yields may be off.

The Soybean Market

Most of the U.S. soybean crop goes into animal feed and oil; only 10 percent goes into the food grade market and the majority of that is sold to Japan for processing into soy sauce, tofu and soy milk. While Japan grows about 150,000 tons of beans, it needs about 4 million tons for production, says Steve Ford, principal of Stonebridge, Ltd., a company that contracts with soybean farmers. Therefore, Japan relies on imports from the United States, South America and Australia.

The Chicago Board of Trade, a global commodity futures exchange that trades soybeans and other crops, has not yet set farm prices for 2005. “The soybean supply looks abundant—high in yield and quality—but we can’t tell how prices will go until the food grade crop is in, both here and in South America,” Ford explains. Mark Ash, agricultural economist with the USDA’s Economic Research Service, estimates prices will average about $16 per bushel, in line with current prices. The 2005 crop doesn’t go into production until late 2006, but wholesale prices should remain stable.

Slow yield growth and rising production costs have turned many American farmers away from growing soybeans and toward more profitable crops like corn. Even though they are contracted ahead of time to grow a certain number of acres and are given substantial premiums and price guarantees, it may be insufficient to encourage them to keep at it. The biggest drawback for U.S. farmers is the small amount of acreage they’ve devoted to non-GMO beans, claims Don Latham of Latham Farms in Iowa, an outfit that sells soybeans to Japan. “It’s becoming increasingly difficult to find people willing to grow the non-GMO beans that Japan requires. That makes it tougher to compete on the world market,” Latham says.

But with food-grade soybean production increasing in South America and even China, supply should be ample to meet demand.

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