Carryover stocks of U.S. rice on Aug. 1, 2010, were reduced 2% from November but still projected at 21-year highs, world carryover was boosted 4% from a month ago even as the Philippines tendered for large amounts of rice, and U.S. rice futures prices plunged from 14-month highs even as some rice-by-class prices were forecast higher, all within the past two weeks.

The rice market was at a minimum unsettled and certainly in a state of flux. Some in the trade likened the current market to the “panic” that caused food riots in some countries in the first half of 2008, but others were quick to point out significant differences. In 2008 the perceived “shortage” was the result of several countries deciding to shut off exports amid soaring rice prices, even though production was expected to be record high. Currently, a few select countries have tight supplies, caused by weather disruptions, but prices are well below last year’s record levels. In both cases, global rice stocks were ample.

Nearby January rough rice futures prices in Chicago climbed to a 14-month high of $15.98 a cwt on Dec. 14 only to plunge the 50c daily limit on Dec. 16. While still well below the record high above $24 a cwt set in April 2008, prices had been on a steady climb since early October, gaining more than 20% before last week’s fall. Prices in Asia had risen as much as 15% since early November.

The U.S. rice crop drew attention much of the year as excessively wet conditions in top-producing Arkansas delayed planting and harvesting. Ultimately, the U.S. crop was forecast at 218 million cwts, up 7% from 2008. With beginning stocks and imports up slightly, total 2009-10 rice supply also jumped 7%, to about 270 million cwts. But with only modest gains expected in domestic use and exports in 2009-10, ending stocks surged 45% from a year earlier in November before being trimmed back to a gain of 42% due to a slight increase in exports in December.

As the U.S. crop was becoming better defined, the world market took center stage. The United States accounts for less than 2% of world rice production, but it generally accounts for about 10% of global exports behind Thailand (30%), Vietnam (20%), and about even with Pakistan and just ahead of India, which this year was expected to be a net rice importer because of a “dry” monsoon season. Additionally, the crop in the Philippines, typically a major rice importer, was damaged by typhoons. The Philippines authorized the purchase of 2.4 million tonnes of rice for delivery in 2010 and tendered early to offset its domestic production shortfall.

Three successive tenders of 600,000 tonnes each by the Philippines was the most significant factor in the rice market in recent weeks, supporting both domestic and world prices. Iraq also tendered for 120,000 tonnes of rice in December, with smaller amounts sought by Japan, Syria and Mauritius, according to press reports. Because U.S. rice prices were deemed favorable compared with those of major Asian exporters, traders expected the United States to garner a chunk of at least the Philippine and Iraqi tenders.

Although tenders were scheduled by the Philippines for Dec. 1, 8 and 14, because offer prices were deemed too high, the world’s largest rice importer bought only about 510,000 tonnes in its first tender, including 300,000 tonnes from Vietnam and less than 100,000 tonnes from the United States. It later added another 62,500 tonnes from Vietnam and South Korea. Then Vietnam surprised the world by offering the entire 600,000 tonnes well below market prices in the latest tender, likely shutting out the United States as well as other sellers.

India has been an interesting study as the monsoon season produced the least rainfall in nearly 40 years, reducing sugar and rice production, with 2009-10 rice output projected by the U.S.D.A. at 83 million tonnes, down 16% from 2008-09. While India is expected to export 2 million tonnes of rice because production of the class it exports was not damaged by the lack of moisture, some in the trade also expected the nation to import as much as 3 million tonnes. But last week India increased its estimated production of summer-grown rice by 2.2 million tonnes from the previous forecast, largely eliminated import needs and further dampening potential demand for U.S. rice.

As action in the global market appeared to be winding down, the United States finally secured a sale of 90,000 tonnes to Iraq late last week, which may be viewed as a “victory” after the United States was shut out of an Iraqi tender in November. Still, U.S. rice 2009-10 ending stocks remain at 23-year highs with a stocks-to-use ratio at a 17-year high of 19%.