SOURCE: Rabobank, N.A.

Rabobank, N.A.

May 03, 2016 10:00 ET

Drought and Global Competition Continue to Challenge U.S. Rice Industry

Rabobank Report Examines Strategies for Success in U.S. Growing Regions

FRESNO, CA--(Marketwired - May 03, 2016) -  U.S. rice growers will continue to face lower prices in the 2016/17 growing season as stocks of more types of rice are elevated domestically, total planted acreage will be close to record levels and quality continues to improve from other global producers. The report, "Reaching Boiling Point - U.S. Rice Producers are Feeling the Heat of Global Competition," focuses attention on these factors and how they impact the different rice types in the growing regions of California and the Midwest.

In California, the challenge is to deal with the pressure of the severe drought that has been ongoing since 2011, while also managing supply to longstanding, profitable markets.

"We know that right now expansion into new markets isn't really on the top of everyone's mind," said James Williamson, analyst at Rabobank and author of the report. "However, it is going to be critical for the long-term growth and profitability of premium California medium-grain rice to look to expansion markets even in times of tight supply."

The report goes on to examine the situations surrounding medium- and long-grain rice in the southern states:

Many southern medium-grain producers planted more acreage in 2015/16, planning to take advantage of supply gaps from California production. These gaps were limited, leaving many with an unsellable surplus. Faced with lower demand and high supply, Rabobank expects that southern medium grain growers will need to work through their 2016/17 crop as well as their surplus stocks to bring prices to a more profitable level.

Southern long-grain acreage is expected to be up 30% from the 2015/16 crops year, with significant conversion coming from soybean acreage. It is expected that with this large crop, combined with nearly half of the prior year's production still in storage, southern growers will be unable to compete on price alone. This presents the opportunity for producers to concentrate on growing and maintaining the quality of their product to gain premium prices in this space.

The report concludes by noting that for export-driven countries such as the United States, changes in production in a competing country or region can help or hurt local industries. The best way, according to the report, to stay in front of this is for producers and processors to do all they can to differentiate themselves by segregating by quality.

The full report is available exclusively to clients of Rabobank and to media upon request.

About Rabobank, N.A.

Rabobank, N.A. is a California community bank and a leading provider of agricultural financing and full-service banking products to California consumers, businesses and the agriculture industry. With more than 100 retail branches, we serve the needs of communities from Redding to the Imperial Valley through a regional structure that promotes local decision-making and active community involvement by our employees.

Rabobank, N.A. is a division of the Rabobank Group, the premier lender to the global food and agricultural industry and a financial services leader providing commercial, retail and agricultural finance solutions in 48 countries around the world. From its century-old roots in the Netherlands, Rabobank has grown into one of the world's largest and safest banks. Rabobank, N.A. is a Member FDIC and Equal Housing Lender. www.rabobankamerica.com

About Rabo AgriFinance

As a leading financial services provider for agricultural producers and agribusinesses in the United States, Rabo AgriFinance adds value using industry expertise, client-focused solutions, and by creating long-term business relationships. Rabo AgriFinance offers a comprehensive portfolio of services that give producers the right products to prepare for, and take advantage of, market opportunities. Rabo AgriFinance representatives offer a wide array of financial services and knowledge to help customers realize their ambitions. This comprehensive suite of services includes loans, insurance, middle market agribusiness, input finance and sophisticated risk management products. Rabo AgriFinance is a division of Rabobank, the premier bank to the global agriculture industry and one of the world's largest and safest banks.

About Rabobank Food & Agribusiness Research and Advisory (FAR)

The Rabobank Food & Agribusiness Research and Advisory (FAR) group is a global team of more than 80 analysts who monitor and evaluate global market events that affect agriculture worldwide. This international team works to collect key insights into commodity markets; conduct in-depth analysis of the factors that drive sector success (or failure); and examine the megatrends that ultimately influence clients' business strategy. These analysts are internationally respected experts in sectors from protein to produce, inputs to oilseeds, and their knowledge is shared with Rabobank customers.

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