|Rice slumps as Thailand taps stocks; corn climbs|
|Wednesday, 30 April 2008|
HTML clipboardREUTERS, SEOUL - US rice futures fell more than 2.5 percent on Tuesday, deepening a retreat from last week's record high as top exporter Thailand said it would release government stocks and traders looked ahead to Asian harvests.
Chicago corn futures, however, jumped by more than 1 percent to near their April 9 record high as the US Department of Agriculture said the US crop was 10 percent planted as of Sunday, well behind the five-year average of 35 percent and below trade estimates for 15-19 percent.
[ID:nN28190166] Food crops such as soy and corn have hit peaks as record oil prices stoke demand for biofuels, while wheat prices have lately fallen sharply from a peak in February as signs of a bumper harvest emerge from major wheat producers around the globe.
Traders and industry officials said while prices of rice, a staple for half the world's population, were expected to ease further as producers rush to boost output, the market was unlikely to fall back to levels seen in recent years.
Chicago Board of Trade rice contracts for May and July fell nearly 60 cents, while back-month contract for January 2009 delivery fell by the daily limit of 75 cents to $20.78 per hundredweight in early Asian trade.
Thailand's domestic rice prices dropped on Tuesday after the government said it would gradually release stockpiled rice into the domestic market to fight rising inflation.
The price of domestic Thai 5 percent percent broken grade white rice fell 1,000 baht to 25,000 baht ($791) per tonne immediately after the government announcement, traders said.
Thailand accounts for nearly a third of all rice traded globally. Global rice prices have tripled this year on fears of tight supplies after leading producers such as India and Vietnam curbed exports to ensure their own supplies as other staples jumped.
"That strong rally is triggering some sell-offs today... we're seeing some speculative funds rolling over front-month positions as they expire," said a trader at Samsung Futures.
U.S. futures prices have already fallen by 8 percent since hitting a record $25.07 per hundred weight on Thursday, although traders cautioned that the surge may not yet be over, especially with a big tender from the Philippines still to fill.
"I don't see prices softening yet because there is a shortage in production... All rice (producing) countries are encountering the same high costs of inputs such as fertiliser and fuel.
I think prices are going to stay firm," said a trader in Manila. The view is shared by a senior official of the U.N.'s Food and Agriculture Organisation (FAO).
"We are hoping that it (increasing productivity) will ease the market situation. But we should not anticipate that consumers will get rice at those original levels," said He Changchui, FAO's assistant director-general and regional representative for Asia-Pacific told Reuters in Bangkok. [ID:nSP77598]
In Thailand, the government's pledge to release the 2.1 million tonnes of stockpiled rice came a day after a trade official said the country's rice prices were likely to ease by about 20 percent in coming weeks on increased supply from the new domestic crop.
"Don't worry, we'll have ample stock for domestic consumption as we will buy back as much as what we have sold," Yanyong Puangrach, head of the Commerce Ministry's Department of Internal Trade told reporters after the plan was approved.
The recent retreat came as major importers seek to subsidise rice prices and urge global action to counter soaring food costs, which have caused hunger, riots and hoarding in many parts of Asia and Africa.
Major importers such as the Philippines are considering raising the cost of subsidised rice and the country has asked the World Bank to persuade rice-exporting nations to lift shipment curbs that have threatened the food security of importing countries.
Despite growing prospects of improving supplies, physical paddy prices in Vietnam advanced 30 percent this week, following panic buying over the weekend. Vietnam has since banned rice speculation and said it had sufficient stocks for domestic consumption and exports.
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