Rice prices have nowhere to go but up as drought in India and cyclones in the Philippines cripple harvests, according to the world’s biggest importer and the top exporter.
Rice may double to more than $1,000 a tonne as dry El Nino weather shrinks output and the Philippines and India boost imports, said Sarunyu Jeamsinkul, the deputy managing director at Asia Golden Rice Ltd in Thailand, the largest exporting nation. Prices won’t peak until March, said Rex Estoperez, a spokesman for the National Food Authority of the Philippines, the biggest importer. The agency issued a record tender for 600,000 tonnes last week and today called for bids for the same volume on December 8 to secure supplies before prices rise.
Global rice supplies are likely to be tighter than last year, when food shortages sparked riots from Haiti to Egypt, said Jeremy Zwinger, president of The Rice Trader, a brokerage and consulting company in Chico, California.
Escalating food prices threaten to spark unrest in developing nations while increasing costs for beer brewer Anheuser-Busch Cos, the biggest US rice buyer, and cereal maker Kellogg Co.
“The demand-supply situation will be extremely tight, with India coming in the market,” said Mamadou Ciss, a rice broker since 1984 and now chief executive officer of Hermes Investments Pte Ltd in Singapore. The Thai benchmark export price will likely rise at least 20 per cent to $650 to $700 a tonne in the next three to five months, he said. “The market can even touch $2,000 a tonne in the middle of 2010,” Ciss said.
The Thai price may soar to last year’s record of $1,038 a tonne, according to the highest estimate in a survey last week of 10 importers, exporters and analysts in the Vietnam, Thailand, India, Singapore and Pakistan. The median estimate was $700 and the lowest $600, compared with $542 today.
On the Chicago Board of Trade, home to futures for long-grain rough rice, prices jumped about 35 per cent from this year’s low of $11.195 on March 16. Futures reached a record $25.07 in April 2008 as concern about supply shortages prompted India and Vietnam to cut exports. The contract was at $15.10 as of 4.04 pm Singapore time.
Rice for January delivery rose 1.6 per cent to $15.10 per 100 pounds in after-hours electronic trading on the Chicago Board of Trade at 3.02 pm Singapore time.
