Rice prices in Thailand, the world’s top exporter, have surged to $US1,000 a tonne, feeding concerns about food security as far as the United States after export curbs by governments worldwide.
The surging price of food and fuel has sparked riots in Africa and Haiti and raised fears that millions of the world’s poor will struggle to feed themselves. Some analysts, however, attribute much of the surge to panic buying by both consumers and governments rather than a dire shortage of supply.
After this week’s over five per cent jump, rice prices stand nearly three times higher than the start of the year. With no sign of the rally relenting, as traders expect more buyers to come into the market, government anxiety about social unrest from the soaring cost of Asia’s staple will deepen.
The crisis, started with India’s imposition of export curbs to protect domestic supplies last year, was felt in the United States this week, with a few major retailers saying they had started to notice signs of panic buying.
Sam’s Club, a unit of retail giant Wal-Mart, said it was capping sales of 20-pound (9 kg) bulk bags of rice at four bags per customer per visit to prevent hoarding.
The previous day, rival Costco Wholesale Corp said it had seen increased demand for items such as rice and flour as customers, worried about global food shortages, stocked up.
“Everywhere you see, there is some story about food shortages and hoarding and tightness of supplies,” said Neauman Coleman, an analyst and rice broker in Brinkley, Arkansas.
In Bangkok, some traders said Thai 100 per cent B grade white rice, the world’s benchmark, could hit $US1,300 a tonne due to unsated demand from number-one importer the Philippines, which fell well short of filling a 500,000 tonne tender last week.
There is also a big question mark over Iran and Indonesia, two countries that normally buy as much as 1 million tonnes of Thai rice each year but which have bought nothing so far in 2008 because of the soaring prices.
Even though some analysts say the price, part of a wider global rally in crop prices, is based on jittery governments rather than fundamentals, Thailand’s top exporters say the world is now set for an era of expensive food.
“Prices will remain firm for the rest of the year,” Chookiat Ophaswongse, head of the Rice Exporters Association in Bangkok, told Reuters.
Rice futures on the Chicago Board of Trade climbed 2.5 per cent on Wednesday to an all-time high of $US24.85 per hundredweight.
However, grain futures tumbled four per cent to a five-month low due to expectations of a large global wheat crop in 2008.
With the northern hemisphere harvest only two months away, officials said planting had started well in Western Australia after good rains, while India said a record harvest and bulging government stocks meant no imports were needed this year.
China’s top wheat-growing provinces of Henan and Shandong were also looking at a bumper winter harvest after recent rains, the Xinhua news agency said.
Brazil on Wednesday became the latest country to suspend rice exports, following in the footsteps of India and its close rival for the mantle of world number-two supplier, Vietnam.
Thailand, which accounts for nearly a third of all rice traded globally, has said repeatedly it would not impose any curbs, a stance that has earned it plaudits from the World Bank for being a “responsible international trading partner”.
“Thailand has even gone the extra mile to explore additional land for rice production,” James Adams, the bank’s Vice President for East Asia Pacific, said in a statement.
The Asian Development Bank and free-trade advocates have criticised the export curbs as an overreaction that has distorted the market.