Rice prices increase to record level
Updated: 2008-04-04 07:30
Rice climbed to a record and corn traded near its highest ever on speculation the 3 percent annual increase in global demand for cereals will outstrip supply as governments curb exports to prevent protests.
Rice, the staple food for about 3 billion people, rose 2.4 percent in Chicago trading yesterday after doubling in the past year. Soybeans advanced for the third day and wheat gained. Crop supply has been reduced by drought in countries including Canada and Australia and a US freeze followed by excessive rain last year.
"A lot of what we're seeing at the moment is not related to production, but the fact that a number of countries are implementing trade restrictions," said Darren Cooper, a senior economist at the International Grains Council in London.
India and Vietnam have cut rice exports, and Indonesia has reduced import tariffs to protect food supplies and cool inflation. Rice in Chicago climbed 42 percent in the first quarter, more than all of last year's 33 percent gain. Record grain prices contributed to strikes in Argentina, riots in Cote d'Ivoire and a crackdown on illicit exports in Pakistan.
Rough rice for May delivery advanced to $20.26 per 100 pounds on the Chicago Board of Trade yesterday after the United Nations' Food and Agriculture Organization said global exports will drop 3.5 percent this year as nations curb sales. It was at $20.225 as of 11:38 am London time.
The World Bank estimates "that 33 countries around the world face potential social unrest because of the acute hike in food and energy prices", Robert Zoellick, the bank's president, said on the organization's website.
For these countries "there is no margin for survival", he said.
Commodity prices are posting their seventh year of gains. The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials more than tripled in the past six years as global demand outpaced supplies of metals and crops. The Standard & Poor's 500 Index of stocks gained about 20 percent.
"The international rice market is currently facing a particularly difficult situation with demand outstripping supply and substantial price increases," said Concepcion Calpe, a senior economist at the Rome-based FAO, an agency that seeks to achieve global food security.
Pakistan, the world's fifth-biggest rice exporter, may ship 15 percent less of the grain this year after a power shortage affected milling of paddy, Mohammad Azhar Akhtar, chairman of the Rice Exporters Association of Pakistan, said by phone.
Corn for May delivery gained as much as 0.5 percent to $5.9875 a bushel. The commodity rose to a record $5.9925 a bushel yesterday on concern that rains in the US, the world's largest producer and exporter of the crop, will delay planting.
(China Daily 04/04/2008 page17)