Panic in Rice futures!
Rice traders hit by panic as prices surge
By Javier Blas in London, Raphael Minder in Hong Kong and LeCerveau in Snohomish County.
Rice prices hit the $1,000-a-tonne level for the first time on Thursday as panicking importers scrambled to secure supplies, exacerbating the tightness already provoked by export restrictions in Vietnam, India, Egypt, China and Cambodia.
The jump came as the Philippines, the largest rice importer, failed for the fourth time to secure as much rice as it wanted.*
In the background causing even more concern this growing season is major flooding going on in the State of Arkansas which along with California produces most of the US Rice crop. Since the U.S. is the 4th leading exporter providing about 20% of world rice exports, news of the delay of rice planting in Arkansas and Mississippi and a reduction in the estimate of the 2008 US rice crop has traders running for cover and rough rice futures up about 37% from February on the Chicago Board of Trade. Part of that increase could be seasonal.
National leaders who rely on cheap rice food prices to keep political peace in the 3rd world are in for trouble going into fall 2008 with shortages and high prices causing major disruptions. On top of that Europe and the US may not be able to afford to provide UN welfare rice OR WHEAT this year with record high prices for these commodities and their own internal demand. THERE MAY NOT BE ENOUGH RICE TO GO AROUND, PERIOD! (China is already buying all the wheat it can find with US dollars).
*Copyright the Financial Times