Fresh demand for rice in two big Asian countries is sending a worrying signal the region’s main staple may join a surge in prices for other grains, worsening Asia’s spiralling food inflation.Asian rice traders say aggressive buying in heavily populated Indonesia and Bangladesh could spread, pushing up world rice prices even though bumper crops in Thailand and Vietnam should mean ample supplies.
“This is only the start of the panic buying,” said Ker Chung Yang, commodities analyst at Singapore-based Phillip Futures, referring to Bangladesh’s recent tripling of its rice import target and Indonesia’s purchase this week of 820,000 tons of Thai rice, nearly five times the volume initially sought. “I expect we’ll have more countries coming in and buying grain.”
Still, analysts see little risk of a 2008-like food crisis, when rice prices rose above $1,000 a ton, double their current level. Vietnam’s rising supply and lower imports from the Philippines, the world’s top importer last year, could mean rice continues to defy a broader trend of fast-rising global prices for wheat, soybeans and other foods.
Thailand’s benchmark 100 percent B grade white rice was offered at $540 per ton on Friday, unchanged so far this year after falling 13 percent last year. In comparison US wheat and corn futures have risen by more than half since the start of last year. A sustained rise in the price of rice, a staple in the diets of nearly half the world’s population, would squeeze the budgets of millions of Asians living near the poverty line, raising the risk of unrest in a reprise of the 2008 food security crisis.
The aggressive purchase by Indonesia seems aimed more at bringing down 20-month high inflation, a view reinforced after the country followed up Friday by scrapping import duties on rice, soybeans and wheat.
“The Indonesian buying is a classic example of countries doubling their imports of rice in a very short span of time,” said one Singapore-based trading manager with an international trading company. “The way Indonesia has bought smells of food security fears rather than genuine demand.” [..]
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