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USDA revises down EU 2022 rice output amid widespread drought

Energia | Petróleo | Produtos Refinados | Combustível de aviação

Combustível de Aviação S&P Global Commodity Insights

USDA revises down EU 2022 rice output amid widespread drought


Output revised down 7.7% from previous forecast, 21% on year

Spanish planted area almost halved from two years ago: ministry

Italian field yields anticipated to be significantly curbed by drought

  • Autor
  • Peter Storey
  • Editora
  • Benjamin Morse
  • Commodity
  • Agricultura

The US Department of Agriculture has projected that 2022 EU milled rice output will dip by 21% on year to 1.35 million mt in its latest Grain and Feed update released July 29.

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In addition to the on-year drop, it also represents a 7.7% decline from its previous forecast. While the harvested area forecast was maintained at 357,000 hectares – down by 11% on year – both the average field yield and milling rate were revised down from previous forecasts. The average field yield was projected at 5.9 mt/ha, down by 9.8% on year and by 7.4% from the previous forecast.

The drop in the USDA's forecasts comes amid droughts across much of Western Europe. The USDA specifically points to "low irrigation water availability in Spain (Guadalquivir River basin) and, to a lesser extent, in Greece and Portugal."

According to the latest estimate from Spain's Ministry of Agriculture, Fisheries and Food, 2022 planted area was projected at 52,600 hectares – down by 39% on year and by 48% from 2020's area.

The USDA went on to single out Italy, which typically comprises 50% of total EU production. "The drought in Italy, coupled with farmers switching to more profitable crops like soy and corn, will likely contribute to the decline" in total EU production.

The most recent estimate from Ente Nazionale Risi estimated total Italian 2022 planted area at 218,100 hectares, down by only 3.9% on year. However, market participants are much more concerned by the impact the historic drought will have on yields.

The tighter supply supported higher prices as the Platts assessment of Italian Indica 5% broken white rice was recorded at Eur990/mt ex-works July 29, up from Eur570/mt ex-works a year prior.

One major mill said that field yields could be down by 30% on year. A broker also remarked that it is now a "fact" that production will be down by 20%-25% on year and it will be worse if desperately needed rainfall does not arrive and quickly.

As usual, August is predicted to be the key month for the Italian crop as it enters the final ripening stage of development. While a substantial production drop is almost unavoidable in Italy – and Europe more broadly – just how large the drop will be will likely be decided in the coming weeks as market participants watch the skies with increasing anxiety.