Rice shoots up to record high

Published Tuesday, April 08, 2008

By MANILA

(REUTERS)

Rice climbed to a record for a fourth day as the biggest importer, the Philippines, announced plans to buy one million tonnes and some of the world’s largest exporters cut sales to ensure they can feed their own people.

Rice, the staple food for half the world, gained 2.4 per cent to $21.50 per 100 pounds (46kg) in Chicago, double the price a year ago.

President Gloria Arroyo of the Philippines announced two rice tenders yesterday and pledged to crack down on hoarding. Anyone found guilty of “stealing rice from the people will be jailed”,

she said.

“We’re in for a tough time,” said Roland Jansen, chief executive officer of Pfaffikon, Switzerland-based Mother Earth Investments AG, in an interview from Zurich yesterday.

Unless prices decline “you will have huge problems of daily nutrition for half the planet”, Jansen said. Mother Earth holds about four per cent of its $100 million (Dh367m) funds in the grain.

China, Egypt, Vietnam and India, accounting for more than a third of global rice exports, curbed sales this year to protect domestic stockpiles. The World Bank in Washington says 33 nation from Mexico to Yemen may face “social unrest” after food and energy costs increased for six consecutive years.

The Philippines, which imports about 15 per cent of its rice, is tightening controls over domestic sales and buying more overseas. The government’s rice tenders are in April and May.

“I am leading the charge against any officials and businessmen who divert supplies or distort the price of the staple food,” Arroyo said in a televised speech yesterday.

“The need to avert social tensions from high food prices has made food sufficiency even more urgent,” Abah Ofon, a soft-commodities analyst with Standard Chartered Plc, said in a report yesterday.

Food importers may not be able to meet their needs because of the export limits, Dubai-based Ofon said.The Philippines may raise imports of milled rice by as much as 42 per cent to 2.7 million tonnes this year from 1.9 million tonnes in 2007 to discourage speculation by local traders, Agriculture Secretary Arthur Yap said in a statement on March 26.

The price of rice from Thailand, the world’s biggest supplier, may climb another 25 per cent this year, said exporters including Vichai Sriprasert, former president of the Thai Rice Exporters’ Association.

Rice seeding in the United States is behind last year’s pace because of flooding in growing regions, the Department of Agriculture said yesterday. Farmers in six states have planted 11 per cent of their crop versus 21 per cent a year earlier.

In Arkansas, the biggest rice-producing state, about two per cent of the crop was seeded, compared with 21 per cent. 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 led by China outpaced supplies of metals and crops.

Rising food prices are fuelling global inflation. Wholesale costs in India rose seven per cent in the week ended March 22, the fastest pace in more than three years. Soaring prices could lead to increased unrest, such as in Haiti recently, the United Nations said in a report yesterday.

Four people died in two days of rioting last week over food prices in Haiti, the Western hemisphere’s poorest country, the organisation said on its website.

“What we see in Haiti is what we’re seeing in many of our operations around the world – rising prices that mean less food for the hungry,” the report said, citing the United Nations World Food Programme’s executive director Josette Sheeran.

Burkina Faso, Cameroon, Egypt, Indonesia, Ivory Coast, Mauritania, Mozambique and Senegal have also experienced unrest in the last several weeks related to food and fuel prices, according to the report.

“We are starting to see conflict and civil unrest,” Francisco Blanch, who heads global commodities research in London at Merrill Lynch, said yesterday. “Central banks will have to start taking measures to slow the inflation pain down.”

The Philippines Government had asked fast-food chains and restaurants to serve half portions of rice to cut waste, farm secretary Yap said on March 19.Wheat traded in Chicago has more than tripled in three years, also threatening social stability.

As many as seven people died from exhaustion or in fights while waiting in bread lines in Egypt, according to police reports.

Italians boycotted pasta and bread last September and Pakistan sent troops to guard flour mills in January.

Standard Chartered yesterday increased its 2008 rice forecast by 12 per cent to $18.50 per 46 kilograms. Rice for May delivery was trading at $21.43 per 46kg on the Chicago Board of Trade as of 11.54am in London.

Stockpiles are at their lowest since the 1980s and demand for the grain has gained 40 per cent in two decades, Ofon said. (Bloomberg)

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