Rice Climbs To Record As World Bank Warns Of Thai Export Risk

[LaoPo]

Rice Climbs to Record as World Bank Warns of Thai Export Risk

April 23 (Bloomberg) -- Rice jumped to a record as World Bank officials said they are concerned pressure is growing in Thailand, the world's largest exporter, to restrict shipments, worsening a global food crisis.

``If a key exporter like this limits foreign sales, it would be very much like Saudi Arabia reducing oil exports,'' said James Adams, vice president of the bank's East Asia and Pacific department. China, Vietnam, India and Egypt have curbed overseas sales to safeguard domestic supplies and cool inflation.

Rice, the staple for half the world, gained as much as 2.3 percent in Chicago today, more than doubling in the past year. Wheat, corn and soybeans advanced to records this year, spurring social unrest in countries including Haiti and Egypt.

``Any move by Thailand to limit exports would create panic in the global market,'' Kenji Kobayashi, a grain analyst at Kanetsu Asset Management Co., said by phone from Tokyo today. The Southeast Asian country ships one-third of the world's exports, according to the U.S. Department of Agriculture.

Soaring prices may put basic foods beyond the reach of the poorest people, raising the risk of a ``silent famine'' in Asia, a World Food Program official said April 21. The poor will struggle to afford higher costs even as supplies stay available in shops, according to Paul Risley, a spokesman for the United Nations agency that feeds 28 million Asians.

Thai Pressure

Thailand may follow its Asian neighbors in limiting sales, the World Bank's Adams said in an interview. The more countries impose export constraints, the ``stronger the pressures become for Thailand to do the same,'' he said April 21.

The nation won't impose curbs on overseas sales amid record prices, Prime Minister Samak Sundaravej said at a press conference yesterday, adding there would be no measures by the government that may distort prices.

``Thailand will lose the name of kitchen of the world'' should it reduce shipments, he said.

UN Secretary-General Ban Ki-Moon said April 20 rising food costs may hurt economic growth and threaten political security. The World Bank has forecast that 33 nations from Mexico to Yemen may face social unrest because of higher food and energy costs.

The price of grade-B white rice, the benchmark export variety, reached a record $854 a ton on April 9, the most recent date for which prices are available. This compares with $327.25 a ton this time last year. Thailand exports almost twice the amount of rice as India, its nearest rival.

Prices Curb Sales

Thai exporters said foreign sales are already hurt by high prices. According to Chookiat Ophaswongse, president of the Thai Rice Exporters Association, the country's rice exports may fall by one-third by the end of the year as high prices erode demand.

Rice futures in Chicago climbed to $24.745 per 100 pounds today and traded at $24.510 at 11:30 a.m. Singapore time. Corn traded at $6.0525 a bushel, near its $6.23 record on April 17.

World Vision International, which provides food relief in 35 countries, said it can no longer provide rations to 1.5 million of the poor people it fed last year because of soaring costs and unmet donor aid commitments.

``Despite our best efforts, more than a million of our beneficiaries are no longer receiving food aid,'' World Vision President Dean Hirsch said in a statement yesterday. ``Around 572,000 of these are children who urgently need enough healthy food to thrive.''

India's record rice and wheat harvests may not be enough to ensure food security in the world's second-most populous nation because about 10 percent of the crop is lost to pests or rots in inadequate warehouses.

Pests Spoil Crops

Agriculture Secretary P.K. Mishra yesterday said production of food grains will rise 4.6 percent to an estimated 227.3 million metric tons in the year ending June 30. About 20 million tons of wheat, rice and lentils, the equivalent of Canada's annual wheat crop, is eaten by rats and birds or spoils.

``I agree that post-harvest capacity needs to be given more focus,'' Mishra said in New Delhi after announcing the forecasts. ``Some areas have good facilities and some areas don't.''

In Cambodia, 13-year-old Pin Oudam gets a free breakfast of rice, fish and yellow split peas every morning at his school in Kampong Speu, the poorest province. Next week he won't.

The World Food Program cut off rice deliveries to 1,344 Cambodian schools last month after prices doubled and suppliers defaulted on contracts. Schools will run out of food by May 1, depriving about 450,000 children of meals, the WFP estimates.

---Bloomberg

LaoPo

[highdiver]

wonderful

when the OPEC countries start to increase oil production then Food exporting countries can export more food.

there is no reason why the price of Gas is so high apart from those OPEC countries making more money. so if they are so rich they can buy the food more expensive.

[AFKAFSinLOS]

Overall should be positive for Thailand as a country.

But would be nice to see grass roots Thailand benefit from all this rather than a select few.

When it comes to Africa and famine, hopefully it will encourage outside countries to help Africa grow/develop its own staple foods, and find more longer lasting solutions.

In the meaner capiitalist society: Those holding soft commodity funds should also see a good year this year. Though quite a few, eg Tisco's recently launched Agriculture Euro Fund in Thailand, seemed to have overlooked rice...

Edited April 23, 2008 by AFKAFSinLOS

[churchill]

Record prices for oil , rice , wheat etc but most countries are denying that inflation is happening . If it is not present yet it surely will be !

[GuestHouse]

Take a look around at the rice whole sale merchants around Asia and looksee who is controlling the rice markets.

[cclub75]

wonderful

when the OPEC countries start to increase oil production then Food exporting countries can export more food.

there is no reason why the price of Gas is so high apart from those OPEC countries making more money. so if they are so rich they can buy the food more expensive.

The reason is very easy to understand : http://omrpublic.iea.org/

2008

Global demand = 87,2 millions barrels per day

Global supply = 87,3 millions barrels per day

Furthermore... looks at the charts on the right : global and OPEC supply already increased (and a lot) during Q4 2007 and Q1 2008 !

Speculation, war premium, Disneyworld, fear of attacks by E.T or whatever.... those are non sense or marginal factors.

The reality is : supply-demand.

As to expect global oil supply to increase over, over, and quickly it's just whishfull thinking on the short / mid term.

Prepare your wallet. Or your bicycle.

Edited April 23, 2008 by cclub75

[AFKAFSinLOS]

Personally I'm not too worried as I also like potatoes .

Not sure "manfarang pat gai" would have quite the same taste though.

[aries27]

bad, just bad for countries dependent on rice import like mine...

but the good thing about this, is that a rice crisis like this is just the jolt PH needs. i believe, this country can well produce sufficient rice it needs. just better support for agriculture, more efficient systems, change of mentality that agriculture is a job for the poor, less educated, and those with no ambitions (yes! white collar jobs are always desired here -- never mind if you have to work in a polluted, crowded, stressful city and with cost of living so much higher than your income) and less laziness...

[Jai Dee]

Global rice prices 'must have peaked': Top Thai exporter

Rice prices in the world market "must have peaked" by now, while rice stockpiles have sharply fallen to 70 million tonnes from about 100 million tonnes, said Chookiat Ophaswongse, president of Thai Rice Exporters Association.

Mr. Chookiat's remarks were made after rice prices in Thailand, the world's number one rice exporter, more than doubled since the beginning of the year.

During the recent rice bidding in Japan, Thai exporters offered rice at US$1,300 per tonne which was considered too expensive. Japanese importers then cancelled the bids on worries that their country would be at fault if the rice was purchased and countries needing rice for hungry consumers would be unable to compete in future biddings.

Mr. Chookiat said foreign buyers are watching how Indonesia and Iran, which consume a large amount of rice, will react in the foreseeable future while rice prices are climbing.

Currently, the global rice stockpile has sharply fallen to some 70 million tonnes from more than 100 million tonnes earlier, he said.

Because of the sharp decline in the world stockpile, Thailand's rice exports during the second quarter this year are projected to tumble around 25-30 per cent, Mr. Chookiat said.

His projection seems to be right as rice forward contracts for April and May fell to less than 800,000 tonnes from a monthly average of one million tonnes during the first quarter this year. Exporters have become more cautious as they would not commit themselves on signing export contracts unless they have sufficient rice in their hands.

Rice prices in the Thai market depend largely on export prices and prices of packaged rice sold in the Kingdom are expected to continue rising, said Mr. Chookiat.

"Local consumption won't be hit if Thailand's exports of rice don't exceed 9 million tonnes this year," he added.

Source: TNA - 23 April 2008

[Thai at Heart]

Global rice prices 'must have peaked': Top Thai exporter

Rice prices in the world market "must have peaked" by now, while rice stockpiles have sharply fallen to 70 million tonnes from about 100 million tonnes, said Chookiat Ophaswongse, president of Thai Rice Exporters Association.

Mr. Chookiat's remarks were made after rice prices in Thailand, the world's number one rice exporter, more than doubled since the beginning of the year.

During the recent rice bidding in Japan, Thai exporters offered rice at US$1,300 per tonne which was considered too expensive. Japanese importers then cancelled the bids on worries that their country would be at fault if the rice was purchased and countries needing rice for hungry consumers would be unable to compete in future biddings.

Mr. Chookiat said foreign buyers are watching how Indonesia and Iran, which consume a large amount of rice, will react in the foreseeable future while rice prices are climbing.

Currently, the global rice stockpile has sharply fallen to some 70 million tonnes from more than 100 million tonnes earlier, he said.

Because of the sharp decline in the world stockpile, Thailand's rice exports during the second quarter this year are projected to tumble around 25-30 per cent, Mr. Chookiat said.

His projection seems to be right as rice forward contracts for April and May fell to less than 800,000 tonnes from a monthly average of one million tonnes during the first quarter this year. Exporters have become more cautious as they would not commit themselves on signing export contracts unless they have sufficient rice in their hands.

Rice prices in the Thai market depend largely on export prices and prices of packaged rice sold in the Kingdom are expected to continue rising, said Mr. Chookiat.

"Local consumption won't be hit if Thailand's exports of rice don't exceed 9 million tonnes this year," he added.

Source: TNA - 23 April 2008

Malthus comes to mind.

"...in all societies, even those that are most vicious, the tendency to a virtuous attachment is so strong that there is a constant effort towards an increase of population. This constant effort as constantly tends to subject the lower classes of the society to distress and to prevent any great permanent amelioration of their condition."

"The way in which, these effects are produced seems to be this. We will suppose the means of subsistence in any country just equal to the easy support of its inhabitants. The constant effort towards population... increases the number of people before the means of subsistence are increased. The food therefore which before supported seven millions must now be divided among seven millions and a half or eight millions. The poor consequently must live much worse, and many of them be reduced to severe distress. The number of labourers also being above the proportion of the work in the market, the price of labour must tend toward a decrease, while the price of provisions would at the same time tend to rise. The labourer therefore must work harder to earn the same as he did before. During this season of distress, the discouragements to marriage, and the difficulty of rearing a family are so great that population is at a stand. In the mean time the cheapness of labour, the plenty of labourers, and the necessity of an increased industry amongst them, encourage cultivators to employ more labour upon their land, to turn up fresh soil, and to manure and improve more completely what is already in tillage, till ultimately the means of subsistence become in the same proportion to the population as at the period from which we set out. The situation of the labourer being then again tolerably comfortable, the restraints to population are in some degree loosened, and the same retrograde and progressive movements with respect to happiness are repeated."

The power of population is so superior to the power of the earth to produce subsistence for man, that premature death must in some shape or other visit the human race. The vices of mankind are active and able ministers of depopulation. They are the precursors in the great army of destruction, and often finish the dreadful work themselves. But should they fail in this war of extermination, sickly seasons, epidemics, pestilence, and plague advance in terrific array, and sweep off their thousands and tens of thousands. Should success be still incomplete, gigantic inevitable famine stalks in the rear, and with one mighty blow levels the population with the food of the world."

To give a mathematical perspective to his observations, Malthus proposed the idea that population, if unchecked, increases at a geometric rate (i.e. 1, 2, 4, 8, 16, etc.), whereas the food-supply grows at an arithmetic rate (i.e. 1, 2, 3, 4, 5 etc.).

[farang prince]

bad, just bad for countries dependent on rice import like mine...

but the good thing about this, is that a rice crisis like this is just the jolt PH needs. i believe, this country can well produce sufficient rice it needs. just better support for agriculture, more efficient systems, change of mentality that agriculture is a job for the poor, less educated, and those with no ambitions (yes! white collar jobs are always desired here -- never mind if you have to work in a polluted, crowded, stressful city and with cost of living so much higher than your income) and less laziness...

Aries, I agree that the PI has the climate, the land mass and the workers to become far more self-sufficient in its rice production. What has been lacking is the governmental push and the necessary infrastructure to make it happen. All you hear from GA and her administration is that they will send rice horders to prison. Since the primary rice horders will probably be the crooked politicians that surround GA, it will be interesting to see if she will follow through with her threats.

[LaoPo]

It's worrying when even WAL-MART USA is limiting rice purchasing for it's customers:

Wal-Mart's Sam's Club limits rice purchases

By Nicole Maestri

NEW YORK, April 23 (Reuters) - Wal-Mart Stores Inc's Sam's Club warehouse division said on Wednesday it is limiting sales of several types of rice, the latest sign that fears of a rice shortage are rippling around the world.

Sam's Club, the No. 2 U.S. warehouse club operator, said it is limiting sales of Jasmine, Basmati and long grain white rice "due to recent supply and demand trends."

U.S. rice futures hitting an all-time high Wednesday on worries about supply shortages.

On Tuesday, Costco Wholesale Corp (COST.O: Quote, Profile, Research), the largest U.S. warehouse club operator, said it has seen increased demand for items like rice and flour as customers, worried about global food shortages and rising prices, stock up.

Sam's Club, the No. 2 U.S. warehouse club operator, is limiting sales of the 20-pound (9 kg), bulk bags of rice to four bags per customer per visit, and is working with suppliers to ensure the products remain in stock.

Warehouse clubs cater to individual shoppers as well as small businesses and restaurant owners looking to buy cheaper, bulk goods.

With prices for basic food items surging, customers have been going to the clubs to try to save money on bulk sizes of everything from pasta to cooking oil and rice.

Sam's Club said the large-sized bags of rice subject to the limits are typically purchased by its restaurant owner or food service customers.

Sam's Club said is not limiting sales of flour or cooking oil at this time. Costco said some of its stores have put limits on sales of items such as rice and flour, but it was trying to modify those restrictions to meet customer demand.

Costco Chief Executive James Sinegal told Reuters that he believed the recent surge in demand was being driven by media reports about rising global demand and shortages of basic food items in some countries.

Food costs have soared worldwide, spurred by increased demand in emerging markets like China and India; competition with biofuels; high oil prices and market speculation.

The situation has sparked food riots in several African countries, Indonesia, and Haiti. United Nations Secretary-General Ban Ki-moon has warned that higher food prices could hurt global growth and security.

Rice prices have risen 68 percent since the start of 2008.

Trade bans on rice have been put in place by India, the world's second largest exporter in 2007, and Vietnam, the third biggest, in hopes of cooling domestic prices. Rice is a staple in most of Asia.

On Tuesday, Tim Johnson, president-CEO of California Rice Commission, which represents growers and millers of rice in the state, said: "Bottom line, there is no rice shortage in the United States. We have supplies."

Wal-Mart shares were up 0.4 percent to $56.80 in afternoon trading, while Costco shares rose 1.7 percent to $69.26.

http://www.reuters.com/article/newsOne/idU...0080423?sp=true

LaoPo

[geriatrickid]

The reason is very easy to understand : http://omrpublic.iea.org/

2008

Global demand = 87,2 millions barrels per day

Global supply = 87,3 millions barrels per day

Furthermore... looks at the charts on the right : global and OPEC supply already increased (and a lot) during Q4 2007 and Q1 2008 !

Speculation, war premium, Disneyworld, fear of attacks by E.T or whatever.... those are non sense or marginal factors.

The reality is : supply-demand.

As to expect global oil supply to increase over, over, and quickly it's just whishfull thinking on the short / mid term.

Prepare your wallet. Or your bicycle.

Excellent response. Even if production was increased, China & India would gobble it up.

More production will not help in the long term. Only the taming of the demand from industrial nations will do that.

[johnnyk]

It is filtering down to the grass roots. My friend's family has done well this harvest and is starting to plant additional land this week.

[Plus]

Do farmers really benefit from rising prices? They sold their rice long time ago, they don't have facilities to store it, they have to sell it to middlemen at current prices who can sit on the stockpiles waiting for the next increase.

Maybe Thais will figure out how to manage it better after next harvest.

Another point - high global prices force Thai sellers to squeeze domestic supplies as it makes more sense to export.

I understand rice industry is very traditional here and very resistant to control or manipulation, they do pretty much as they please.

[britmaveric]

Sam's club - well they may limit per visit. Go out come back in and you can have your extra bag of rice.

However that being said - perhaps switching to noodles is the answer???

[Ricardo]

Let Them Eat Cake !

[jumnien]

The world's population is getting fatter at an alarming rate. There is no shortage of food, just a population lost in gluttony! If everyone made it a point to get down to a decent weight, food shortages would disappear. This is clearly a very important personal health issue that the media is making out to be a food industry problem.

[Tony Clifton]

Sam's club - well they may limit per visit. Go out come back in and you can have your extra bag of rice.

However that being said - perhaps switching to noodles is the answer???

Made from rice or wheat?

[Thai at Heart]

Do farmers really benefit from rising prices? They sold their rice long time ago, they don't have facilities to store it, they have to sell it to middlemen at current prices who can sit on the stockpiles waiting for the next increase.

Maybe Thais will figure out how to manage it better after next harvest.

Another point - high global prices force Thai sellers to squeeze domestic supplies as it makes more sense to export.

I understand rice industry is very traditional here and very resistant to control or manipulation, they do pretty much as they please.

Very resistant to control from whom? Govt agencies mop up surplus to stabilise prices when required. Export Licenses are in the hands a very narrow group of people in Bangkok. Every stage of the market has a middle man.

In terms of a manipulation free market, the rice market in Thailand definitely is not it.

[Plus]

When the govt tries to prevent traders from hoarding rice, it goes nowhere. People who can export rice or sell to exporters are not going to sell to domestic traders for a third of the price.

They need to manage a "fair", two tiered price for domestic and export market. Does the government have a working structure or not? I think not, they never thought about it like that.

[sibeymai]

Certainly there will be a few more Benz sold upcountry this year.

[LaoPo]

Food & Rice Price Crisis - in general -

http://news.bbc.co.uk/2/hi/in_depth/world/...ood/default.stm

Rice Production and Consumption

Price of Rice

Top 10 Countries Receiving Rice Aid

Asian states feel rice pinch

http://news.bbc.co.uk/2/hi/south_asia/7324596.stm#graph

LaoPo

[ratcatcher]

The world's population is getting fatter at an alarming rate. There is no shortage of food, just a population lost in gluttony! If everyone made it a point to get down to a decent weight, food shortages would disappear. This is clearly a very important personal health issue that the media is making out to be a food industry problem.

How we doin' folks?

[Thai at Heart]

The world's population is getting fatter at an alarming rate. There is no shortage of food, just a population lost in gluttony! If everyone made it a point to get down to a decent weight, food shortages would disappear. This is clearly a very important personal health issue that the media is making out to be a food industry problem.

How we doin' folks?

The EU is paying to keep land fallow. The US doing something similar.

And then to cap it all off also subsidising production for bio-fuels.

Worldwide madness.

[Naam]

The world's population is getting fatter at an alarming rate. There is no shortage of food, just a population lost in gluttony! If everyone made it a point to get down to a decent weight, food shortages would disappear.

good to know that i am not the only @sshole TV-member

[YoungFarang13]

none of the articles explain why supply is down so far from last year?

[Thai at Heart]

none of the articles explain why supply is down so far from last year?

Vietnam had a partial crop failure.

[YoungFarang13]

none of the articles explain why supply is down so far from last year?

Vietnam had a partial crop failure.

so just a fluke and will be back to normal in a year

[buffcoat]

The FAO a UN supported entity estimates global rice production will increase in 2008 by 1.8%.

The problem is caused by two factors.

A short term mismatch of demand and supply and the population growth in those countries where rice is the staple foodstuff.

The longterm implication is that significant increases in the land dedicated to rice production will be necessary to offset the demand caused by population growth.

The supply side will be vulnerable to adverse/unusual weather for the forseable future as there is little chance of a cushion of production being available.

In addition the rising price of oil makes the economic pressure to grow bio-fuels instead of rice a strong competing pressure (the US has already reduced it's acreage of rice production to switch to bio-fuel crops).

Thailand as a whole should benefit from this situation over the next decade but that is not to say that the rice farmer in the paddy will to the same extent.