This special edition of The Rice Advocate offers a closer look at the challenges shaping today’s rice market. We’ll return on Friday with our regular coverage and market updates.

The Rice Market Dilemma

America’s rice farmers are facing one of their toughest seasons yet, squeezed by low prices, rising costs, and intense global competition. Imports are climbing, exports are slipping, and heavy market speculation is driving prices even lower. Where do we go from here?

Key Issues Facing the U.S. Rice Market

The current state of the U.S. long-grain rice market raises several pressing questions regarding policy and market dynamics. Among these are whether the United States should increase its GSM-102 export credit guarantees for rice to alleviate low milling supplies, whether regulatory limits should be placed on large speculators who are exerting significant influence over the market by holding extensive short positions, and whether there should be restrictions on rice imports from countries where farmers receive substantial government support that ensures profitable production levels. These are all vital questions that warrant thorough consideration and action.

The Situation for U.S. Rice Producers

U.S. rice producers are experiencing economic hardship, with November futures at $10.75 and southern cash prices ranging from even to $0.40 above futures, but even lower in the delta. Most need $15.50–$17.00 just to break even, so current prices fall 33%–40% short, causing significant financial pressure. As a result, many farmers are thinking about quitting, while some who want to continue farming face bankruptcy. As one banker said in a recent meeting, “It is going to be a long winter working to get these guys refinanced.”

For the 2026 crop cycle, financial challenges include a 20-30% increase in fertilizer prices, equipment repair costs rising by 6-9%, and persistent labor shortages affecting all sectors. Nevertheless, the predominant concern for most farm budgets as 2026 approaches will be the market price of rice.

Rice Supply & Export Trends

According to the latest WASDE report, the ending stocks for the 2025–2026 crop year are projected to be 35.4 million cwt of long-grain rice. Despite this inventory, widespread adverse weather conditions across all major growing regions have led to lower milling quality compared to previous years. This decline in quality has negatively affected demand for U.S. long-grain rice.

In terms of exports, the data shows a significant downturn in the 2024–2025 crop year, with exports falling by 14.3 million cwt, representing a 19% decrease from the prior year. Although the current estimates for the 2025–2026 crop year anticipate an increase of 3.2 million cwt year-over-year, this figure remains well below the export levels achieved in the 2023–2024 crop year.

This export demand loss can be attributed to the very poor milling grades across the entire long-grain rice six-state growing area along with bumper crops grown in South America which Central American buyers were able to source with much better milling yields. 

U.S. Long Grain Rice Competition

Historically, South America was not a significant exporter of rough rice. However, in recent years, increased production in the region has resulted in a surplus available for export. Despite this development, the most significant global competitors for U.S. long-grain rice continue to be India, Thailand, and Vietnam.

In March 2025, the International Trade Commission published a report titled “Rice: Global Competitiveness and Impacts on Trade and the U.S. Industry.” This report provides a detailed examination of the unfair trade practices employed by competing countries, shedding light on the substantial challenges faced by the U.S. rice industry in terms of global demand. In summary, the competitive environment for U.S. rice producers is far from a level playing field.

Short-Term Policy Solutions

Addressing Supply to Stabilize Prices

The longstanding adage claims that "low prices cure low prices," but experienced farmers recognize that this is not accurate. Reducing supply is necessary to address persistently low prices. Immediate action must be taken to tackle excess supply, or the industry risks a surge in bankruptcies among rice producers.

Expanding the GSM-102 Program

One potential measure to help alleviate the surplus of low milling long-grain rice in the U.S. involves the GSM-102 program, which provides export credit guarantees to encourage sales of rice and other bulk commodities to developing countries. Under this program, rice could be provided to eligible developing countries willing to accept a blend of white milled rice with up to 50% brokens. This may require USDA to add more countries to the GSM-102 eligible list, especially emerging markets with improving risk profiles and approve a wider base of foreign financial institutions for participation in the program. Although this proposal would include a relatively high proportion of broken rice, there is currently a large inventory of that is milling below 50 pounds of head rice in the United States. Certain countries, especially those facing food shortages, may be open to accepting this rice to feed their populations. Implementing this program would likely incur lower costs compared to emergency payments, and the expected reduction in inventory could result in increased rice prices, potentially offsetting the need for direct payments to farmers. While some producers may favor direct payments due to the time required to approve additional foreign financial institutions and reassess country risk profiles under GSM-102 arrangements, the program presents a viable alternative for inventory reduction and price support. In addition, as traditional food assistance programs such as Food for Peace are reformed by refocusing on its original purposes of using surplus U.S. agricultural commodities for foreign food assistance this rice could be utilized.

Imported Rice vs. Exported Rice Barriers

A major contributor to the large U.S. rice carryover supply is imports, which are at 44 million cwt — exceeding current ending stocks of 35.4 million cwt. While most imported rice is aromatic, about 2.4 million cwt is plain white rice competing with domestic crops. The U.S. is actively working to develop a Jasmine rice variety that can rival Thai Jasmine in both quality and scale. Last year, domestic production reached an estimated 2.1 million cwt. In comparison, Thai Jasmine made up 59.5% of all U.S. rice imports, totaling about 26.2 million cwt.

If we take the current export prices in Thailand ($385/mt) and the U.S. export price ($575/mt) and add the duty in each country, the U.S. price in Thailand goes up $172/ton. For rice imported into the U.S., the price goes up only $14/ton. See below:  

It is worse if we were to look at India. They hit the U.S. with a 70% tariff on milled rice (80% on rough rice) and then add another 10% in a Social Welfare Surcharge.

These charges make exporting rice into either country a non-factor as even without them we would be hard pressed to export rice to either country given our current prices; however, that is not the point. The U.S. farmer is trying to compete with these countries and there is less incentive to develop rice varieties that compete if these imbalances and barriers remain. The U.S. could restrict imports to allow the rice industry to develop and come up to speed with the aromatic rice. If Thailand can export their rice into the U.S. with minimal to no restraints, getting up to speed is going to take much longer as the incentive for developing this new domestic demand fights against an uneven playing field. 

The question may be asked, how does Thailand sell their rice so cheap? It is a multitude of supply supports but much of this goes back to India and their export ban in 2022, a ban that lasted two years. As a result, their inventory levels grew becoming excessive and when they lifted the ban, Asian rice prices collapsed and have never recovered. Overproduction continues across India, Thailand and Vietnam. With the price dropping below production costs, the Thailand government instigated a price-guarantee which provided guaranteed profit on the plain white rice. The Thai-Jasmine rice was being sold at much higher levels and is currently at $1097/MT vs $385/MT for white rice. The same type of support is provided for India’s rice producers as well. 

The U.S. is handcuffed by the lack of barriers on rice being imported into the United States. It may not be a fast cure but a policy change on imports would be protecting the U.S. industry as it shifts to compete for the same market. 

Speculation & Market Pressure

Another pressing issue involves speculation in the futures market. Recent CFTC data indicates that large money-managed funds hold short positions amounting to nearly 70% of the total open interest in the November futures contract. This substantial level of speculation continues to exert downward pressure on market prices, forcing farmers to sell their rice at significant losses. These losses threaten the financial stability of producers and may lead to widespread liquidation and bankruptcy across the industry.

Some caution is needed with speculation. While speculators drive prices down, the domestic milling industry, which benefits from lower rough rice acquisition costs, has little incentive to push for higher farm-gate prices. Consumer rice prices are evidence of this, having remained stable while rice farmer prices have collapsed, suggesting strong milling margins. Yes, millers have had an increase in operating costs, but those have been more than offset by lower prices. Since speculation won’t be resolved quickly, just investigating and looking at new standards in the short term could discourage the short selling which is currently harming rice farmers.

While alternative solutions exist, quick fixes won't resolve such serious issues. More substantial action is needed. To tackle the long-grain rice market's challenges, reducing supply — not simply accepting low prices — is key to improving conditions. To stabilize our rice market and protect our economy, here are three actions to explore:

• Expand and streamline GSM-102 usage for white rice with up to 50% brokens into food-insecure, possibly higher-risk profile destinations (government-to-bank risk share; bank-to-bank L/Cs). This draws down off-grade inventories faster and supports basis without new direct outlays.
• Set temporary tariffs or safeguards on specific non-aromatic and aromatic lines to relieve immediate import pressure while the domestic aromatic segment scales.
• Consider position concentration review thresholds, enhanced transparency, or circuit-breaker logic focused on deterring oversized short dominance in the rice futures market.

Looking Ahead

In the months ahead, the direction of the U.S. rice market will depend on how quickly policymakers, industry leaders, and farmers can act together to restore balance. Without meaningful steps to reduce oversupply, curb speculation, and level the playing field on trade, the challenges facing U.S. rice producers could deepen further. Yet with the right mix of targeted policy support and innovation, there’s still an opportunity to strengthen the industry’s resilience and ensure U.S. rice remains a vital part of both domestic and global markets.

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