Twenty-year high in rice prices sparks fears

FT ^ | 03/04/08 | Javier Blas in Vienna and Raphael Minder in Hong Kong

[TigerLikesRooster]

Twenty-year high in rice prices sparks fears

By Javier Blas in Vienna and Raphael Minder in Hong Kong

Published: March 4 2008 00:19 | Last updated: March 4 2008 02:41

Rice prices have surged to a 20-year high in the latest sign of global food inflation, creating policy headaches in Asia, where more than 2.5bn people depend on cheap and abundant supplies of the grain.

Thai rice prices, a global benchmark, surged last week above the level of $500 a tonne for the first time since at least 1989, according to the United Nations Food and Agriculture Organisation, prompting importing countries to seek assurances on supplies.

Robert Zeigler, director at the International Rice Research Institute in Manila, said policymakers should be concerned. “If history is any indicator, we should be worried because rice shortages have in the past led to civil unrest,” he said.

US rice in Chicago, the benchmark for the world’s fourth-largest exporter of the grain, jumped on Monday to a record $18.10 per hundredweight ($400 per tonne) – up about 75 per cent in the past year.

High prices and extremely tight supplies have prompted leading rice suppliers – including Vietnam, India and Egypt – to restrict exports in recent months in an attempt to keep local markets well-supplied and domestic prices under control. The Philippines and Vietnam are in discussions about rice supply security after President Gloria Macapagal Arroyo for the first time asked her Vietnamese counterpart to guarantee an undisclosed amount of rice for the 2008/09 season. The Philippines is the world’s largest buyer of the grain.

Analysts have attributed the surge in rice prices to bad weather that has hit supply; urbanisation that has cut the acreage given over to cultivating the grain; and strong demand on the back of rapid income growth in China, India and other Asian countries.

In spite of a record crop of about 420m tonnes in the current season, global rice supplies are lagging behind demand, which has risen to 423m tonnes, leading to a further decline in global rice inventories, according to the US Department of Agriculture.

Rice stocks have fallen this season to about 70m tonnes, the lowest level for 25 years and less than half the 150m tonnes held in global inventories in 2000.

Vichai Sriprasert, honorary chairman of Riceland International, a leading Thai rice trading company, said he expected the price of rice to rise “much, much more”.

Some traders said Thai exporters were defaulting on contracts as they were being offered better prices locally.

The next Vietnamese crop, to be harvested in the next few weeks, was unlikely to bring down prices, said Alex Waugh of the industry-backed UK Rice Association. “It may provide some short-term relief and restraint on prices rising even further.”

Asia has not known famines since the 1970s, and recent price rises for rice and other basic foodstuffs have sparked unrest.

[TigerLikesRooster]

Ping!

[TigerLikesRooster]

On the bright side, I will get to lose weight.

[digger48]

I hereby promise to forego rice cakes for the duration of this crisis.

Hope that helps a bit.

[bjs1779]

Sounds like we all will.

[bjs1779]

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Code	Name	Price
30119	Beef Stroganoff... #10 Can	$22.64		*Out of Stock
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30227	Ground Beef...#10 Can	$37.80		*Out of Stock
30114	Hearty Stew with Beef... #10 Can	$30.66
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30143	Seafood Chowder... #10 Can	$34.30
30108	Spaghetti with Meat and Sauce... #10 Can	$21.20		*Out of Stock
30134	Sweet & Sour Pork with Rice... #10 Can	$35.24		*Out of Stock
30135	Turkey Tetrazzini... #10 Can	$33.56		*Out of Stock
30113	Vegetable Stew with Beef... #10 Can	$24.20		*Out of Stock
30117	White Rice - Instant	$16.30		*Out of Stock
30132	Wild Rice Mushroom Pilaf... #10 Can	$26.40		*Out of Stock

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[TigerLikesRooster]

Hmm... is this because people are hoarding or manufacturers are running out of raw materials, rice, wheat, and meat?

[NVDave]

I’m looking at my stopwatch, wondering how long it will take someone to blame corn-for-ethanol for the high price of rice.

[bjs1779]

Hmm... is this because people are hoarding or manufacturers are running out of raw materials, rice, wheat, and meat?

Whats the difference, you can't get it anymore it seems.

[TigerLikesRooster]

I will probably lose 1/10 pound less.:-)
Thanks for helping me out.

[Travis McGee]

"Let them eat (rice) cake."

[webschooner]

the culprit: glowbull warming!

[G.Love]

Get used to it. This is what an inflation looks like and it’s going to get worse.

[Eric in the Ozarks]

I have several kilos of Basmati put aside...

[digger48]

I have several kilos of Basmati put aside...

I've got a box of Uncle Bens in my beer fridge : )

[Balding_Eagle]

LOL! You beat me to it.

[Myrddin]

I checked the "hearty stew with beef" entry that has some items in stock. The ingredient list includes wheat gluten. I couldn't eat it if it was free.

[Myrddin]

The next Vietnamese crop, to be harvested in the next few weeks, was unlikely to bring down prices, said Alex Waugh of the industry-backed UK Rice Association

The recent cold spell in Vietnam killed most of the rice crop. I wouldn't be making any bets on new supplies from them for a while.

[VeniVidiVici]

Get used to it. This is what an inflation looks like and it’s going to get worse.

And we can lay this right at the feet of the Democrat party and their refusal to open up new areas for oil exploration. Right now a huge new tap opening in the Gulf or arctic would drop prices like a rock.

[G.Love]

Mmmm partially. I lay it more at the feet of Bernanke and easy money.