Global price of rice rising..

This will make life more difficult for the poorest in Asia who will be unable to buy enough rice to stave off starvation without a subsidy from their governments. The Philippines regularly imports rice as its own production is not sufficient to feed the entire population. Often the country sells to the poor at subsidized prices. This is from vietnamnews.

Storms drive up global rice price

by Le Hung Vong


A bid to sell 150,000 tonnes of rice to the Philippines won by the Southern Food Corporation (Vinafood 2) may help raise world rice prices, local media reports.

On November 4, Vinafood 2 won the rice exporting contract at US$480 per tonne, much higher than previous deals.

Prices are expected to continue to go up this year, as they did in 2008.

The Philippines’ scheduled bid to buy 600,000 tonnes of rice on December 1 could raise prices to $560 per tonne, the Viet Nam Food Association (VFA) has said.

Local senior economist Nguyen Dinh Bich was quoted by Sai Gon Marketing as saying that world rice prices have kept increasing.

Prices of Thai 15 per cent broken rice went up from $451 per tonne in October to $490 on November 13 and then to $495 on November 19, a total increase of $44 per tonne (9.8 per cent). Meanwhile, price of Viet Nam’s five per cent broken rice has also increased from $410 per tonne to $460 per tonne and then $480, representing a record price increase of $70 per tonne (17.1 per cent).

The upward tendency followed the Philippines announced plans to import some 1.2 million tonnes of rice while other rice producers face the risk of crop failure.

The Minister of Agriculture of the Philippines was quoted by Sai Gon Marketing as saying that the world rice price may return to the record price of 2008 due to the bad weather which has made output decrease sharply and has forced a number of countries to import the grain.

Philippines fails to contract expected amount of rice.

This shows just how serious the global rice shortage is as the Philippines managed to buy only about two thirds of what it had hoped and at much higher prices than they predicted. The rising cost of the rice subsidy hurts the Philippine treasury and no doubt the differential between subsidised and market price rice will generate numerous corrupt deals.

This is from Xinhua.
Philippines fails to contract expected amount of rice


www.chinaview.cn 2008-04-17 16:46:48 Print

MANILA, April 17 (Xinhua) -- The Philippines failed to secure the expected 500,000 metric tons of rice from international bidders in Thursday's rice tender, the third in the year held to hedge against a rice supply shortage evolving into a serious national crisis.

Only 325,750 metric tons of rice was offered at prices ranging from 872.5 U.S. dollars to 1,220 U.S. dollars per metric ton, the national television network GMA News said.

It quoted Ludovico Jarina, deputy head of the National Food Authority (NFA), the government's importing arm, as saying that the bidding prices exceeded the agency's expectation of 900 U.S. dollars per metric ton in maximum.

As one of the world's top rice importers, the Philippines expected to buy not less than 2.2 million metric tons of rice overseas to feed its people in 2008. It has purchased about 1.2 million metric tons at a cost of 626 million U.S. dollars due to soaring grain prices in the global market.

Half of the contracted amount has arrived while 90,000 metric tons are on the way, Philippine President Gloria Macapagal-Arroyo told the public in a Tuesday's address, saying that the rice supply "is secure for the foreseeable future."

Thursday's contracted amount is set for April to June delivery while the government is planning another tender on May 2.

Credit Suisse, the Swiss-based investment bank, predicted the Philippines would spend up to one percent of GDP to deal with the rice crisis this year because the government vowed to maintain the price of subsidized rice sold in domestic market unchanged at 18.25 pesos per kilogram (0.445 U.S. dollars) despite the price of imported rice that almost doubled since the start of the year.

Rice shortage bites..

This is from Bloomberg. As this article notes the rice shortage is a global phenomenom and as the staple food is much of the world these increases will have a devastating impact on the poorest in many countries. It sounds as if some traders are hoarding to increase prices even more and the article notes the increase in stock prices of one trading company.



Rice shortage bites
From Cairo to New Delhi to Shanghai, the run on rice is threatening to disrupt worldwide food supplies as much as the scarcity of confidence on Wall Street earlier this year roiled credit markets.

China, Egypt, Vietnam and India, representing more than a third of global rice exports, curbed sales this year, and Indonesia says it may do the same. Investigators in the Philippines, the world's biggest importer, raided warehouses last month to crack down on hoarding. The World Bank in Washington says 33 nations from Mexico to Yemen may face ''social unrest'' after food and energy costs increased for six straight years.

Rice, the staple food for half the world, rose to a record $US20.50 per 100 pounds in Chicago on April 4, double the price a year ago and a fivefold increase from 2001. It may reach $US22 by November, said Dennis DeLaughter, owner of Progressive Farm Marketing in Edna, Texas.

''Rice will gain substantially over the next two years,'' said Roland Jansen, chief executive officer of Pfaffikon, Switzerland-based Mother Earth Investments, which holds 4% of its $US100 million funds in the grain. Governments will likely maintain curbs on exports ''because those countries want to be able to continue to feed their own populations,'' he said.

The upheaval parallels turmoil in global capital markets that seized up nine months ago when subprime mortgages collapsed. The difference between what it costs the US government to borrow and the rate banks charge each other for three month loans ended last week at 1.36 percentage points. A year ago the gap was 0.33 percentage point.

Export Curbs

Rice growing nations are driving up prices for producers that want to sell abroad. The Vietnam Food Association said April 2 it asked members to stop signing export contracts through June, following China, which imposed a 5% tax on exports as of January 1. Egypt banned rice shipments through October.

Prices ''are not coming back to the levels we came from,'' said Mamadou Ciss, head of Singapore-based rice broker Hermes Investments. Vietnam's 5% broken-grain rice may be 40% higher within three months, he said.

Record grain prices are stoking inflation. Wholesale costs in India rose 7% in the week ended March 22, the fastest pace in more than three years, underscoring the threat from rising food costs, the Ministry of Commerce and Industry in New Delhi said April 4.

The increase may boost profits for suppliers. Padiberas Nasional rose the most in seven years in Kuala Lumpur stock exchange trading last week. The company is Malaysia's only licensed rice supplier.

Commodity Rally

Goldman Sachs forecasts that all agricultural commodities it covers will rise during the next six months, except for sugar. Global demand for cereals will expand 2.6% this year, 1.6 percentage points above the 10-year average, according to the Food and Agriculture Organization in Rome.

The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials gained for six consecutive years and advanced 15% this year.

''We have some very serious problems developing globally for food and energy,'' said Greg Smith, executive director of Global Commodities in Adelaide, which manages $US350 million.

World rice stockpiles are at their lowest levels since the 1980s, and the United Nations forecasts that exports will drop 3.5% this year.

Demand will increase 0.6% this year to 422.5 million tons, while production will rise about 1% to 422.9 million tons, the U.S. Department of Agriculture said March 11.

Grains Revolution

Rice yields globally expanded more than 40% from 1980 to 2000, according to data compiled by the USDA. They've increased only about 5% since then, the data show. Stockpiles will fall to 75.2 million tons, about half of where they were at the start of the decade, the USDA said.

''There's been no new technology revolution for the rice seed since the grains revolution in the 1970s,'' said Mehdi Chaouky, a London-based agricultural analyst with Diapason Commodities Management, which oversees $US8 billion.

Some analysts say buyers in Thailand and Vietnam are hoarding grain and may release it in coming weeks, causing prices to drop. Another risk for speculators is that the increase will lead farmers to grow more crops. Wheat rose to a record $US13.495 a bushel in February before dropping as much as 34% in the next five weeks, partly on expectations for more planting.

Curbing Exports

''There are lessons to be learned from what happened in the wheat market,'' said Darren Cooper, a senior economist with the International Grains Council in London. ''The market will adjust, and moving forward we will see some restrictions on demand.''

For now, governments are limiting exports to ensure they have enough food at home. Vietnam, the third-biggest rice exporter after Thailand and India, will reduce shipments 11% this year to 4 million tons, Prime Minister Nguyen Tan Dung said March 30.

''Bread is losing its place as the main staple food and rice is replacing it, and this created the problem,'' Ali Sharaf Eldin, chairman of Egypt's Chamber of Grains, said in an April 1 interview.

Investigators in Manila caught profiteers last month who were repackaging 20,000 fifty-kilogram bags of rice from subsidized government supplies for sale as higher-grade grain, according to Ric Diaz, an official at the National Bureau of Investigation.

'Social Tension'

The Philippines' state-run National Food Authority allows suppliers to sell at a subsidized price of 18.50 pesos (44.23 US cents) per kilogram in low-income areas. People in the warehouse north of Manila were preparing to market the rice as a variety that sells for at least 35 pesos, Diaz said in a March 31 interview.

Drought is hurting plantings in China, where an estimated 19.4 million hectares (48 million acres) of arable land had been affected by March 26, according to Xinhua, the state news agency. Consumer prices in China, the world's fastest-growing economy, soared 8.7% in February, the most in 11 years.

''A constant price rise of rice can't be viewed as sustainable,'' said Abah Ofon, a commodities analyst with Standard Chartered in Dubai. ''As with any staple commodity, there's a risk of social tension when prices begin to rise.''


Bloomberg