Reflecting the inflationary zeitgeist, CBOT Rough Rice futures prices hover high as of late. High input costs, complicated transit, and declining domestic supply underlie the trend amid tepid demand.

Figure 1: Nearest September Rough Rice Futures Daily Settlement ($/cwt), 2020-Present

A Global Staple

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.

Domestic production, however, is down; from 227.5 million cwt1 in 2020/21, to 191.8 in 2021/22 to a projected 164.3 in 2022/23 according to the USDA World Agricultural Supply and Demand Estimates. Declines in both the new and old crop years are attributable primarily to less planted acreage, with yield decreasing only slightly.

Rice output is declining elsewhere as well, with the USDA Foreign Agricultural Service reporting the top producing countries as China and India, which together produce more than half of the world’s rough rice, are also seeing annual declines in the new crop year. India’s current crop is said to be cut down by an uneven monsoon, while China shifts some focus to other crops. 

Global per capita rice consumption demonstrates a flat to downward trend, as increasing rice consumption in Sub-Saharan Africa only partially offsets economically developing populations in Asia diversifying their diets.

International Trade: Politics Get in the Way

The United States is a net exporter of rice, sending abroad 3.4 million MT in 2021 while importing 957,000 MT. The majority (544,000 MT) of rice imported to the United States in 2021 originated in Thailand. The top five recipients of exported U.S. rice (Mexico, Haiti, Japan, Canada, and Honduras) have taken more than half of all exported U.S. rice (between 53% and 59% annually), over the past five years.

Figure 2: Top Five Recipients of U.S. Rice by Volume (MT), 2017-2021

Notably, the second largest recipient of U.S. rice over the past five years is Haiti, which is a country experiencing political destabilization. According to the USDA, Haiti exhibited a slower-than-expected pace of rice purchase from the U.S. in 2022 due to its political instability. U.S. rice is the predominant rice consumed in Haiti, and rice overall was estimated to account for 23% of the daily caloric intake of the average Haitian in 2011. 

The complication of Haiti as an export destination follows year-over-year decline in both rough and milled rice exports, which is expected to continue into 2023.

Figure 3: U.S. Milled Rice Exports (million tons)2

Domestic Weather Compounds Basis Risk

The Mississippi River water level sunk to levels not observed in three decades this past October, choking trade flow for a myriad of agricultural commodities making their way from the Midwestern and Southern United States to the Gulf of Mexico. In many spots, the river was not deep enough for commercial traffic, prompting emergency dredging by the U.S. Army Corps of Engineers, and barges grounded on sandbars with unprecedented frequency. The situation sent shipping prices skyrocketing, with the amount of goods a barge can carry halved in many cases. Additionally, drought and water shortages plague the current crop in California (where the short-grain Japonica varietal is grown). The figure below shows the reported USDA daily spot price for No. 2 medium-grain rice in California and Arkansas rising dramatically in Q4 2022, continuing an upward trajectory throughout the year.

Figure 4: USDA No 2. Medium Grain Rice Spot ($/cwt), California and Arkansas

Complicated transport on the Mississippi River compounds the bullish trend in Rough Rice futures caused by low domestic production and high input costs. Local basis fell along with the water level, as riverside elevators were unable to move grain. Elevators routinely turned away producers looking to sell in October, unable to sustain more supply in their facilities. Cash prices fell, with local supply in unfortunate abundance, while global supply faltered from the bottleneck, weakening basis along the Mississippi River. Thankfully, the river has risen in recent weeks, rebounding the cash price as elevators welcome grain, strengthening basis.

Rice: Timeless and Resilient

Global rice consumption Is projected to rise in the coming decade by 1.1% annually to 2031, according to the United Nations Food and Agriculture Organization. The majority of increasing consumption is attributable to rising populations in Asia, plus Africa increasing per capita consumption. 

Because rice is a relatively adaptable crop, it is grown in areas of the U.S. susceptible to extreme weather, though production can vary significantly due to climate risk and acreage losses. Relative prices for soybeans, which compete for acreage in many areas, influence planting decisions. Additionally, rice is vulnerable to supply chain uncertainty, as the Mississippi River transport strangle of 2022 has demonstrated. As for decades, CBOT Rough Rice futures remain the ideal vehicle with which to hedge long-grain rough rice price risk in the Americas. Lean more at

1 - Rough Equivalent of Rough and Milled Rice
2 - Source: USDA, Economic Research Service, Rice Yearbook dataset; 2000/01–2019/20; USDA, World Agricultural Outlook Board, World Agricultural Supply and Demand Estimates, 2020/21–2022/23.

All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.

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