Business | Markets
Rice climbs to record on speculation
Rice climbed to a record and corn traded near its highest ever on speculation the three per cent annual increase in global demand for cereals will outstrip supply as governments curb exports.
- Bloomberg
- Published: 00:44 April 4, 2008
Bangkok: Rice climbed to a record and corn traded near its highest ever on speculation the three per cent annual increase in global demand for cereals will outstrip supply as governments curb exports.
Rice, the staple food for about three billion people, rose 2.4 per cent in Chicago trading Wednesday after doubling in the past year.
Soybeans advanced for the third day and wheat gained. Crop supply has been reduced by drought in countries including Canada and Australia and a US freeze followed by excessive rain last year.
"A lot of what we're seeing at the moment is not related to production, but the fact that a number of countries are implementing trade restrictions," said Darren Cooper, a senior economist at the International Grains Council in London.
Protectionist measures
China, India and Vietnam have cut rice exports, and Indonesia has reduced import tariffs to protect food supplies and cool inflation. Rice in Chicago climbed 42 per cent in the first quarter, more than all of last year's 33 per cent gain. Record grain prices contributed to strikes in Argentina, riots in Ivory Coast and a crackdown on illicit exports in Pakistan.
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Rough rice for May delivery advanced to $20.26 per 100 pounds on the Chicago Board of Trade Wednesday after the United Nations Food and Agriculture Organisation said global exports will drop 3.5 per cent this year as nations curb sales. It was at $20.225 as of 11.38am London time.
The World Bank estimates "that 33 countries face potential social unrest because of the acute hike in food and energy prices," Robert Zoellick, the bank's president, said. For these countries "there is no margin for survival," he said.
Have your say
How would your household budget be affected by the increase in the global rice prices? Do you think that other staples would be similarly affected as a result of increased demand? Tell us at letter2editor@gulfnews.com
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