Food inflation shows no sign of easing with rice, the world’s most important staple, now swept up into the market maelstrom of falling stocks, rising demand and soaring prices.
World rice prices jumped 30% late last week to around $US760 a tonne for Thai rice, the benchmark. Higher quality fragrant Thai rice now costs $US900 a tonne, also up 30%.
Thai rice was selling for around $US380 a tonne in January but falling global stocks, indifferent production in parts of Asia (particularly China) and increasing demand have combined to drive up prices. Like wheat, rice stocks are at their lowest levels since the mid-70s.
Rice doesn’t have the formal markets-based pricing that wheat, corn, soybeans and canola/rapeseed does. It’s a more cultural and informal system, depending on long established trade and Government arrangements through Asia, the Middle East and Africa.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
Rice’s price surge matches the sharp rises in the price of corn, soybeans and wheat, especially in January and February. Prices for those grains have eased from record highs in the past three weeks but could be set running again tonight when the US Department of Agriculture releases its first plantings intentions survey for the year, covering wheat, corn, soybeans, cotton and rice.
A fall in corn plantings is tipped as US farmers switch to soybeans and wheat, which could see corn prices surge sharply. World stocks of all grains are at such low levels that the higher plantings and potential production won’t have that great an impact, but the news will add to the speculative pressures in food prices.
The jump in rice prices followed a move by Egypt to ban all rice exports for at least six months in an attempt to keep down local prices, and the Philippines has revealed plans to buy rice to replenish depleted local stocks. The Philippines is the world’s biggest rice importer, buying up to 1.8 million tonnes annually, but it will have to buy from the emergency stocks of Vietnam and Thailand to fill an order for 500,000 tonnes.
The Vietnamese government also said last week that it would cut rice exports by nearly a quarter this year, India effectively banned the export of all but the most expensive grades of rice and Cambodia has banned all rice exports except by government agencies.
Since January, the Pakistani Government has been using troops to guard trucks carrying wheat and flour; Indonesia has seen protests over soybean shortages, and China has put price controls on cooking oil, grain, meat, milk and eggs.
Newsagencies have also reported protests (some call them “riots”) in Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen as consumers complain about the rising cost of food.
The United Nations has already warned the soaring cost of grain will leave a shortfall in its food aid this year and wants donor countries to pay an extra half a billion dollars to finance existing shipment levels.