Posted on 07/30/2007 7:10:52 PM PDT by humint
JEDDAH, — Basmati rice prices have soared to historic highs in Saudi Arabia due to a decrease in supply from the previous harvest.
Manar Al-Baroudi, marketing manager of Tilda Company in Saudi Arabia, said the arrival of the Indian crop in October saw anxious buying activity amid low global stock levels.
“Initial panic buying led to traditional Basmati prices rising quickly to 30 percent over the previous season,” said Al-Baroudi. “Opening market prices started at 1,700 to 1,800 Indian rupees per quintal at auction. With such high prices many buyers remained cautious. However, by April prices at auction were soaring, achieving 2,200 Indian rupees per quintal. This represents an increase of 55 percent over 2005 prices.”
Al-Baroudi said that for Pusa & Super Basmati prices also climbed rapidly reaching 1,350 Indian rupees per quintal. This was 30 percent higher than last season and again buyers might have anticipated the market had peaked.
“In the space of approximately three weeks the value of the rupee appreciated by about 12 percent against the US dollar and this has now started to be reflected in the prices quoted by exporters,” Al-Baroudi said.
The situation in Pakistan is even more acute as rice shipments have rapidly declined and created shortages. According to market analysts, a widespread fear of an American food embargo has caused Iran to stockpile three years worth of consumption, paying in some cases almost double last year’s price. Most of the rice is being officially exported to Iran, but instances of smuggling have been reported by the English language daily Dawn.
An increase in the price of commodities has forced the government to ban the export of pulses from Pakistan. In the case of rice, prices in the local market have risen 50 to 75 percent and the country may soon be importing rice for the first time in its history to meet domestic demand.
With the next crop not due until November 2007 and the scarcity of Basmati, there will be increased incentives for unscrupulous traders to adulterate their rice with inferior and non-Basmati grains despite the fact this practice is outlawed in the European Union and other countries.
He added that price increases had already begun to filter through the supply chain on the back of the initial 30 percent rise observed at harvest time in October 2006.
Meanwhile, a report of the Ministry of Commerce and Industry a couple of days ago showed a rise in the prices of the major food items while the prices of red meat including locally-bred meat and sugar showed a slight fall in the second quarter of the year.
The consumer price index in the Kingdom rose by 0.2 percent in June compared to the previous month, the Saudi Press Agency reported. Because the riyal is pegged to the dollar, a weakening US currency can cause inflation in products and services, especially goods and services from the Euro zone.
There seems to be a world-wide shortage of grains, rises in prices and declines in stocks. It is the same story with wheat. In Italy, the price of pasta has risen significantly, but, as farmers commented, these price rises have been a long time coming.
I like Basmati rice, but if the price tripled, it still would not be too expensive. Right now you can buy two ten pound bags of it for $20, or less, and twenty pounds of rice (uncooked) will last you quite a long time.
When it comes to commodities like rice, GDP per capita plays a major role in determining the impact of price hikes. I posted the article because it shows important economic relationships between the United States and the Middle East.
US monitor predicts worldwide grain shortage
Posted Tue Oct 7, 2003 3:55pm AEST
A key non-governmental organisation in the United States is predicting an international shortage of grain could cause chaos in world markets.
The Earth Policy Institute says the world grain harvest has fallen short of consumption for the fourth year in a row, and grain stocks are at their lowest level in 30 years.
President Lester Brown says production is falling due to rising temperatures and falling water tables, at the same time as demand is growing by 15 million tonnes each year.
EXCERPT
All the while the US is converting fields to grow more corn to feed a misguided ethanol policy. Typical eco-nut folly, save the environment by harming humanity.
Where Will the Corn Come From?Large corn stocks will enable U.S. ethanol production to increase initially without requiring much additional adjustment in the corn market. The U.S. ended the 2004/05 marketing year (MY—September 2004-August 2005) with stocks of 2.1 billion bushels—enough to produce 5.7 billion gallons of ethanol. As long as corn is the primary feedstock for ethanol in the U.S., however, sustained increases in ethanol production will eventually require adjustments in the corn market.
One possibility is that ethanol producers will secure the additional corn they need by competing with other buyers in the marketplace and bidding up the price of corn. According to the USDA Agricultural Baseline Projections (released in February 2006), the share of ethanol in total corn use will rise from 12 percent in 2004/05 to 23 percent in 2014/15. A comparison of the 2006 Baseline with the 2005 Baseline suggests that much of the increased use by ethanol producers will be diverted from potential exports; the 2006 Baseline projects higher use for ethanol and lower exports than the 2005 Baseline.
Yes, but how much is it in Quatloo’s?
Ahh, but it is such fragrant dirt. So are the Saudis vulnerable to a Basmati blockade? They seem to be quite nervous.
I remember when it was like, 19 rupees per quintal.
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