Rice price hits new high on global markets
Saturday, 26 April 2008

Agency

The prices of rice in Thailand, the world's top exporter, surged to a record high above US$1,000 (S$1,360) a tonne yesterday as fears of a global shortage spread as far as the United States.

Thai 100 per cent B grade white rice, the world's benchmark for global trade, was quoted in a range of US$1,000 to US$1,080 per tonne.

This week's 5 per cent jump takes prices to nearly three times their level at the start of the year. Rice futures in Chicago also rose above US$25 per 45kg on Wednesday, but eased slightly in early trading yesterday.

The price surge, which started when India imposed export curbs last year and has since led to shortages and riots from Egypt to Haiti, has made its way to US shores.

Americans have been cleaning out the shelves at major retailers including Wal-Mart's Sam's Club and Costco Wholesale Corp. On Wednesday, Sam's Club said customers could buy only four 9kg bags of jasmine, basmati and long-grain white rice per visit. Its rival Costco has already limited customers to two bags of rice a day at some of its stores.

"It is like a run on the bank. We don't think there is a shortage; it is just increased shopping by customers who think there is," said Costco's chief financial officer, Richard Galanti. But the upward surge of rice prices shows no sign of abating.

In Bangkok, some traders said Thai 100 per cent B grade white rice could hit US$1,300 a tonne due to unsated demand from the No. 1 importer, the Philippines.

Pressure on supplies and prices increased on Wednesday, when Brazil became the latest country to suspend rice exports, following in the footsteps of India and Vietnam.

But Thailand, which accounts for nearly a third of all rice traded globally, has said it will not impose any curbs. Yesterday, a Thai government spokesman reiterated that the country will meet all export commitments.

Wichianchot Sukchotrat was speaking in Kuala Lumpur, where Thai Prime Minister Samak Sundaravej met Malaysian leaders, during which food security was a key topic of discussion.

"We don't need to restrict Thai exports because in the next few months, a new crop will come out," the spokesman said. In Singapore, where most rice imports come from Thailand, importers say it is getting more difficult to hold back on price increases given the more frequent, and steeper, price jumps in global markets.

Singapore's biggest supermarket chain, NTUC FairPrice, said it will moderate price increases and stagger them to soften the impact on consumers. Said its spokesman: "Our current rice stockpile was secured at a lower price a few months ago.

Going forward, we have to import rice at prevailing market rates which have increased by more than 100 per cent since March last year."

The Government has highlighted three measures to help the needy: bigger and earlier payouts for those on the Public Assistance Scheme; two instalments of Growth Dividends; and targeted help from the citizens consultative committees (CCCs).

Most of the CCCs that spoke to The Straits Times said there was an increase in the number of people approaching them for help.

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