"We are not very far from another rerun of 2008 prices," Arthur Yap, the Philippines' Agriculture Secretary, said at a conference in Cebu, central Philippines today. Higher oil prices may push up fertilizer costs, boosting prices further, he said.
Food price protests swept the globe from Bangladesh to Haiti last year after fears of supply shortages prompted producers including India and Vietnam to cut rice exports. Rice futures surged to a record $25.07 per 100 pounds in April 2008 as shipments slowed and the Philippines, the biggest buyer, increased purchases to secure supplies and cool inflation.
"Circumstances present that possibility" of rice prices returning to record levels, Dwight Roberts, president of the U.S. Rice Producers Association, said in an interview in Cebu yesterday. "We're on thin ice."
Spot rice prices in the U.S., the fourth-largest exporter, may surge to $16 per 100 pounds early next year from more than $12 now, as cool, wet weather reduces output there and drought and storms cut supplies from Latin America, India and the Philippines, Roberts said.
U.S. output may miss a Department of Agriculture estimate by as much as 15 percent and help push spot and futures prices even higher, through last year's records, he added.
Demand High
The risk of rice prices returning to record levels requires governments to support his call for a global food reserve to safeguard supplies, Yap said.
"In 2008 when prices shot up, when fertilizer prices moved up, when export bans were imposed, a free, liberalized international trading order was not able to do anything for the world, especially the world's poor and hungry," he said.
Global demand for milled rice in the marketing year through 2010 will jump to the highest level since at least 1960 and exceed output by 2.4 million metric tons, the USDA said Oct. 9. That forecast assumes a 2.7 percent decline in global output to 433.6 million tons and an 8.3 percent gain in U.S. output from a year earlier to 7.056 million tons.
Rough rice for January delivery rose as much as 1.3 percent to $13.945 per 100 pounds in electronic trading on the Chicago Board of Trade. The contract traded at $13.915 at 4:29 p.m. in Singapore and has gained 9.8 percent the past six months.
Transparency Lacking
Futures and spot prices have yet to reflect the global supply and demand situation because of a lack of transparency in some of the government data that traders rely on, the U.S. Producers Association's Roberts said.
"Sooner or later when there's a big purchase, and stocks are low, then reality hits," he said. "And that's not just in the United States."
The Philippines is bringing forward rice imports for 2010 after losses in the domestic crop from cyclones the past month, National Food Authority administrator Jessup Navarro said yesterday.
Drought in South America has also reduced irrigation, forcing some producers to cut acreage this planting season and curbing exports, Roberts said. Declining output in India, the second-biggest producer, may also turn the South Asian nation into an importer, triggering a surge in global prices, he added.
"I think India is a real wild card in the next few months, or the next few weeks," Roberts said.
Indian Imports
India may import up to 3 million tons next year as the government secures supplies in case the nation faces another year of drought, Rakesh Singh, head rice trader at Emmsons International Ltd., which supplies about 500,000 tons a year in India, said in Cebu today.
The weakest monsoon in India since 1972 may slash rice output by about 18 percent to 81 million tons in the marketing year that began Oct. 1, below forecast demand of 89 million tons, according to the United Nations Food and Agriculture Organization.
"The government can afford to have rice sitting in the warehouse and rotting, but they can't afford to have a very low stockpile of rice next year in case another drought or flooding hurts crops, Singh said. "We may hear about a tender in the next few weeks."
If India imports rice next year, it will be the first time the country has purchased the grain since 2006, according to data from the U.S. Department of Agriculture, and only the second time since 2001.
The country's return to the import market would push Thai rice export prices, the regional benchmark, at least 25 percent higher from current levels to $800 a ton, Singh said.
The price of 100 percent grade-B Thai white rice was set at $525 a ton last week, the fourth consecutive weekly drop, according to Thai Rice Exporters Association figures.
Still, India has no plans to import rice because its reserves are adequate, Nanda Kumar, the country's farm secretary, said in New Delhi yesterday.
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