Jae Hur and Jason Gale
Bloomberg
Mon, 21 Apr 2008 22:12 EDT
The staple for half the world, which has more than doubled in a year, gained as much as 2.3 percent to $24.615 per 100 pounds on the Chicago Board of Trade. The contract, trading at $24.215 at midday in London, touched a high of $24.67 April 18.
A World Food Program official said today the surge in prices may put basic foods beyond the reach of the poorest, raising the risk of a ''silent famine'' in Asia. Countries including Haiti and Egypt have been hit by social unrest over food prices. Wheat, corn, soybeans and oil have also risen to records this year.
''People are concerned that Thailand, the world's biggest exporter, may even reduce sales after domestic rice prices surged sharply this year,'' said Hiroyuki Kikukawa, an analyst at IDO Securities in Tokyo.
Indonesia, the world's third-largest rice producer, will hold back surplus rice from export this year to bolster domestic stockpiles, President Susilo Bambang Yudhoyono said April 18. China, Egypt, India and Vietnam have also cut rice exports.
''Rising food costs put pressure on governments to hold down the price of the most basic necessities,'' Frederic Neumann, an economist at HSBC Global Research, wrote in a note today. ''Exporters who normally provide fairly reliable supply to world markets have therefore been forced to curtail shipments.''
Political Security
UN Secretary-General Ban Ki-Moon said yesterday rising food costs may hurt economic growth and threaten political security. The World Bank has forecast that 33 nations from Mexico to Yemen may face social unrest because of higher food and energy costs.
Asia's poorest people will struggle to afford higher food costs even as supplies remain available in shops, according to Paul Risley, a spokesman for the World Food Program, the United Nations agency that feeds 28 million Asians.
''If you're making $1 a day, $2 a day, somewhere near the bottom of the economic scale, a sudden doubling of the price of rice or of wheat is going to make it impossible for you to put food on the table,'' Risley said in an interview on Bloomberg Television. ''There's a risk of a silent famine.''
''The era of cheap food is over,'' Rajat Nag, managing director at the Asian Development Bank, said in an interview on Bloomberg Television today. ''Prices will come down from present highs, but they won't go back to the lows we've seen.''
The U.S. and other nations are encouraging the use of fuels made from crops such as corn, palm oil and soybeans to reduce dependence on petroleum and limit environmental damage.
Market Distortions
''Subsidies for biofuels are distorting the market,'' Nag said from Singapore. ''Inflation is of concern and it's on an upward trend in every country.''
Singapore today threatened to punish grain-trading companies that attempt to fix rice prices, joining other Asian nations in cracking down on hoarding. Still, there was no shortage of rice in the country at present and no sign yet of price-fixing, Minister for Trade and Industry Lim Hng Kiang said.
Singapore, an island nation of 4.6 million with little agricultural land, imports almost all its food requirements.
''Export restrictions are mainly placed on white rice and not the premium rice that we mainly consume in Singapore,'' said Lim told Parliament. ''As such, these moves have not disrupted our rice supply.''
U.S. rice exports may gain as much as 20 percent this season, Rabobank Group said in a report e-mailed today. The U.S. is the third-largest rice-exporting country, behind Thailand and Vietnam.
Weaker Dollar
''The outlook for U.S. rice growers remains strong,'' according to the report. ''U.S. export prices continue to experience upward pressure from several factors, including healthy sales, generally high commodity prices and the relatively weaker U.S. dollar.''
Philippine President Gloria Arroyo said April 15 that her government would act against ''rice and even bread bandits.'' The nation is the world's largest rice importer and failed last week to fill a tender for 500,000 tons.
''Panic among governments and consumers alike has led to hoarding, putting further pressure on rice prices,'' Neumann, the economist at HSBC, wrote in a report today. ''Even in Thailand, one of the world's largest surplus producers, consumers are now keeping a stash.''



















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