Rice: Hamilton contends higher prices ahead

Crowley, Louisiana (LSU Press Release) – Rice prices worldwide will be strong the next two years because rice stocks in Asia have declined significantly, a rice marketing expert said Thursday (June 29) at the annual LSU AgCenter Rice Research Station Field Day.

Milo Hamilton, president and co-founder of Firstgrain Inc. and www.firstgrain.com, told the crowd of more than 500 people who attended the field day that the Chinese and Indian rice stocks are down by 85 million tons over the past six years.

"In two years, theoretically, China should have almost no rice left," Hamilton said. "The roosters are coming home to roost."

A water crisis in China is contributing to a price increase in northern China, he said.

Reservoirs in Brazil received half the normal rainfall recently, and the price of rice in that region has increased by $60 per metric ton in the past three weeks, Hamilton said, adding, "The price in Europe is trading at new highs of $15 per hundredweight due to a poor crop last year."

Hamilton said he’s bullish on the U.S. rice price. He said he expects prices to hit $10.75 to $12.75 per hundredweight in the next couple of years, and he said those prices could possibly reach $13.

The marketing expert said farmers should spend more time on marketing to get the best prices for their crop.

Hamilton said he’s hearing stories from many farmers across the United States about low prices for their rice and high prices for fuel. He also warned farmers should not look for U.S. price supports to continue – with the expectation that money will be available for conservation programs but not for production agriculture.

Farmers will have to become more innovative to make money, and that even includes off-farm income.

"The future will be bright, if we do it right," he said, stressing that farmers have to accept that the agricultural economy has changed.

"Farming is not a way of life anymore," he said. "It’s a big business. If farming is a way of life, it can be a very expensive business, but if farming is a business, it can be a very rewarding way of life."

Input costs for farmers have increased because of fuel prices, and many have gotten out of rice production. Even in Asia, farmers cannot make ends meet, and that means overall yields may suffer. In Indonesia, one of the largest importers of rice, the government has increased price supports to $8.50 per hundredweight– about $2 higher than the U.S. rice loan rate.

"We are in a growing and gathering storm," Hamilton said.

The expert also said even though crude oil prices are above $70 a barrel, commercial users are still buying crude oil futures, which may indicate much higher crude prices ahead.