Growing demand for rice prompts export curbs

From Bloomberg News

From Cairo to New Delhi to Shanghai, a run on rice is threatening to disrupt worldwide food supplies as much as the scarcity of confidence on Wall Street 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 including Mexico and 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 $20.50 per 100 pounds in Chicago on Friday, double the price a year ago and a fivefold increase from 2001. It may reach $22 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 of Pfaffikon, Switzerland-based Mother Earth Investments.

Governments will probably maintain curbs on exports “because those countries want to be able to continue to feed their own populations,” he said.

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

Goldman Sachs Group Inc. 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.