Niko
Editor, Senior Moderator
Rice to Return 100% as Typhoons, Drought Roil Asians (Update3) By Supunnabul Suwannakij and Luzi Ann Javier
Nov. 16 (Bloomberg) -- Rice prices have nowhere to go but up as drought in India and cyclones in the Philippines cripple harvests, according to the world?s biggest importer and the top exporter.
Rice may double to more than $1,000 a metric ton as dry El Nino weather shrinks output and the Philippines and India boost imports, said Sarunyu Jeamsinkul, the deputy managing director at Asia Golden Rice Ltd. in Thailand, the largest exporting nation. Prices won?t peak until March, said Rex Estoperez, a spokesman for the National Food Authority of the Philippines, the biggest importer. The agency issued a record tender for 600,000 tons last week and today called for bids for the same volume on Dec. 8 to secure grain before prices rise.
Global rice supplies are likely to be tighter than last year, when food shortages sparked riots from Haiti to Egypt, said Jeremy Zwinger, president of The Rice Trader, a brokerage and consulting company in Chico, California. Escalating food prices threaten to spark unrest in developing nations while increasing costs for beer brewer Anheuser-Busch Cos., the biggest U.S. rice buyer, and cereal maker Kellogg Co.
?The demand-supply situation will be extremely tight, with India coming in the market,? said Mamadou Ciss, a rice broker since 1984 and now chief executive officer of Hermes Investments Pte Ltd. in Singapore. The Thai benchmark export price will likely rise at least 20 percent to $650 to $700 a ton in the next three to five months, he said. ?The market can even touch $2,000 a ton in the middle of 2010,? Ciss said.
Chicago Rally
The Thai price may soar to last year?s record of $1,038 a ton, according to the highest estimate in a survey last week of 10 importers, exporters and analysts in Vietnam, Thailand, India, Singapore and Pakistan. The median estimate was $700 and the lowest $600, compared with $542 today.
On the Chicago Board of Trade, home to futures for long- grain rough rice, prices jumped about 35 percent from this year?s low of $11.195 per 100 pounds on March 16. Futures reached a record $25.07 in April 2008 as concern about supply shortages prompted India and Vietnam to cut exports.
Rice for January delivery rose 1.5 percent to $15.08 per 100 pounds in electronic trading on the Chicago Board of Trade at 1:50 p.m. Paris time.
Crops Destroyed
India, the second-most-populous nation, may become a net importer for the first time in two decades. The nation?s weakest monsoon since 1972 will cut domestic output 15 percent to 84 million tons in the marketing year that began Oct. 1, according to the United Nations Food & Agriculture Organization. Consumption will be 89 million tons, according to Concepcion Calpe, a senior economist at the FAO.
The Philippines is accelerating imports for 2010 supplies after two storms destroyed about 1.3 million tons of rice. State-run National Food Authority plans to buy at least 1.45 million tons by December, including the scheduled purchases of a total 1.2 million tons in two record tenders on Dec. 1 and Dec. 8, Romeo Jimenez, director of the state food buyer, said today.
Rice?s looming rally contrasts with sagging prices for other agricultural commodities. Wheat futures are down 7.5 percent this year in Chicago after global output jumped to a record. As of Nov. 13, corn is little changed this year as farmers in the U.S., the world?s biggest producer, neared completion of their second-largest crop ever.
?Rice Crisis?
?There is a strong possibility we?ll see a rice crisis next year as India faces drought, and Indonesia may feel the pinch of El Nino weather,? Asia Golden Rice?s Sarunyu said in an interview Nov. 9. Prices may top $1,000 a ton should the Thai government decide to maintain its stockpiles rather than export them, he said.
An El Nino weather pattern is brewing, with sea surface temperatures at least 1 degree Celsius (1.8 degrees Fahrenheit) above average across much of the central and east-central equatorial Pacific Ocean in the four weeks ended Nov. 7, according to a Nov. 9 report by the U.S. Climate Prediction Center.
The FAO is holding a world summit on food security starting in Rome today. Food prices in 31 poor countries remain ?stubbornly high,? the organization?s Director General Jacques Diouf said in Rome on Nov. 11, and more than 1 billion people suffer from hunger.
The FAO Food Price Index, which tracks cereals, sugar, meat, oils and dairy, gained for a third month to 158 in October. The index peaked at 213.5 in June 2008 before plunging to 139 in February amid the global economic crisis.
?Ripe? Fundamentals
Rice production has lagged behind demand in four of the past eight years, and rising consumption is expected to erode global stockpiles by 41 percent to 85.9 million tons in the 2009-10 marketing year, down from a record 146.7 million tons in 2001-02, according to the U.S. Department of Agriculture.
?If we start having problems -- weather problems, production problems -- the price of rice is going to skyrocket over the next decade,? Jim Rogers, chairman of Rogers Holdings, said in an interview Oct. 12. ?When it happens, I don?t know. But I know that the fundamentals are ripe.? Rogers, based in Singapore, predicted the start of the commodities rally in 1999 and is the author of books including ?Investment Biker.?
Farmers are struggling to squeeze more crops from each acre while demand increases with a growing world population. Limited growth in per-acre yields is ?a major reason for the imbalance between long-term demand and supply,? according to the Laguna, Philippines-based International Rice Research Institute. Average annual yield growth slowed to 1.4 percent from 1990 to 2005, down from 2.14 percent during the previous two decades, it said.
Food Riots
In March 2008, global food prices soared 57 percent from the previous year, the UN reported. Around 40 people died in riots in Cameroon and at least seven were killed in Haiti as violence erupted over food shortages. The FAO reported food- related violence in Burkina Faso, Egypt, Indonesia, Ivory Coast, Mauritania, Mozambique and Senegal. In the U.S., Costco Wholesale Corp. and Wal-Mart Stores Inc.?s Sam?s Club limited bulk rice sales.
Global rice harvests will drop 2.3 percent to 448.6 million tons in the 2009-10 year from 459.1 million tons a year earlier because of the crop losses in India and the Philippines and cyclones, landslides, flooding and earthquakes that reduced production in Japan, Nepal, Pakistan and Taiwan, the FAO said in a report Nov. 10.
?Tight Situation?
Rice fields in the Western Hemisphere are also suffering.
The U.S. crop has been ?severely damaged? in the main growing area of the upper Mississippi River Delta, while drought cut plantings in South America?s largest producing region, the Mercosur, according to Dwight Roberts, president of the U.S. Rice Producers Association in Houston.
?It doesn?t take a genius to see we are in a real tight situation,? Roberts said.
As production suffers, demand will increase 1.2 percent to 451.3 million tons from 446 million tons a year earlier, according to the FAO.
The potential for lost production to send prices to records will be limited by a record wheat harvest and ample rice stockpiles, Calpe said in an interview Nov. 9.
Kellogg, based in Battle Creek, Michigan, declined to comment on its rice use. Last year, after wheat and rice prices jumped to records, the maker of Froot Loops and Rice Krispies announced at least three price increases for U.S. breakfast cereals because of rising energy and ingredient costs.
?While commodity costs have fallen as we expected, we?re still seeing overall cost of goods inflation versus last year,? Chief Executive Officer A.D. David Mackay said Oct. 29 during a conference call with analysts.
?Huge? Stockpiles
Thai rice inventories of as much as 6 million tons, triple the 2 million tons of last year, are ?a huge amount, if you take into account that total trade is 30 million tons,? Calpe said. ?I?m pretty sure they will have to release them soon.?
In addition, world wheat stockpiles swelled by 36 percent to 165 million tons this year from 121 million tons last year, according to the USDA. Consumers can turn to bread and wheat when rice prices jump.
?Do not extend what we saw in 2008 to the situation we have today,? Calpe said. ?This is not a reason for concern today. If in the 2010 season we again face problems, then we will start worrying.?
Sales to India and the Philippines will determine how high prices go, Samarendu Mohanty, senior economist at the International Rice Research Institute, said Oct. 28.
Record Imports
The Philippines held its first tender for supplies a month earlier than usual and may boost imports 30 percent to a record 2.6 million tons, the USDA forecasts.
India?s reserves, normally about 20 percent of the country?s consumption, are plunging as output falls faster than demand, said The Rice Trader?s Zwinger.
The Indian harvest will drop 16 percent, shrinking stockpiles to about 9.9 million tons by October 2010 from 17 million a year earlier, according to the USDA. The country may buy as much as 3 million tons abroad next year, becoming a net importer for the first time in 21 years, Mohanty said.
?If India imports 3 million tons, they?d become the world?s biggest importer,? said Mark Welch, an agriculture economist at Texas A&M University in College Station, Texas. ?Three million tons disrupts natural trade because they normally don?t import any.?
Three state-owned traders issued tenders for 30,000 tons in October. The response to offers hasn?t been announced, with one potential buyer, MMTC Ltd., saying last week it wouldn?t buy rice at ?high prices.?
?A country like India -- or China, for that matter -- they can absolutely not rely on a very thin market? for imports, Calpe said. ?They are market makers. If they come to the market to buy, they will see the prices skyrocket.?
To contact the reporters on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net; Luzi Ann Javier in Singapore at ljavier@bloomberg.net
Last Updated: November 16, 2009 08:05 EST
http://www.bloomberg.com/apps/news?pid=20601080&sid=aMlMojVDQ_E8#
:tiphat: Holly Deyo @ Millennium Ark
Nov. 16 (Bloomberg) -- Rice prices have nowhere to go but up as drought in India and cyclones in the Philippines cripple harvests, according to the world?s biggest importer and the top exporter.
Rice may double to more than $1,000 a metric ton as dry El Nino weather shrinks output and the Philippines and India boost imports, said Sarunyu Jeamsinkul, the deputy managing director at Asia Golden Rice Ltd. in Thailand, the largest exporting nation. Prices won?t peak until March, said Rex Estoperez, a spokesman for the National Food Authority of the Philippines, the biggest importer. The agency issued a record tender for 600,000 tons last week and today called for bids for the same volume on Dec. 8 to secure grain before prices rise.
Global rice supplies are likely to be tighter than last year, when food shortages sparked riots from Haiti to Egypt, said Jeremy Zwinger, president of The Rice Trader, a brokerage and consulting company in Chico, California. Escalating food prices threaten to spark unrest in developing nations while increasing costs for beer brewer Anheuser-Busch Cos., the biggest U.S. rice buyer, and cereal maker Kellogg Co.
?The demand-supply situation will be extremely tight, with India coming in the market,? said Mamadou Ciss, a rice broker since 1984 and now chief executive officer of Hermes Investments Pte Ltd. in Singapore. The Thai benchmark export price will likely rise at least 20 percent to $650 to $700 a ton in the next three to five months, he said. ?The market can even touch $2,000 a ton in the middle of 2010,? Ciss said.
Chicago Rally
The Thai price may soar to last year?s record of $1,038 a ton, according to the highest estimate in a survey last week of 10 importers, exporters and analysts in Vietnam, Thailand, India, Singapore and Pakistan. The median estimate was $700 and the lowest $600, compared with $542 today.
On the Chicago Board of Trade, home to futures for long- grain rough rice, prices jumped about 35 percent from this year?s low of $11.195 per 100 pounds on March 16. Futures reached a record $25.07 in April 2008 as concern about supply shortages prompted India and Vietnam to cut exports.
Rice for January delivery rose 1.5 percent to $15.08 per 100 pounds in electronic trading on the Chicago Board of Trade at 1:50 p.m. Paris time.
Crops Destroyed
India, the second-most-populous nation, may become a net importer for the first time in two decades. The nation?s weakest monsoon since 1972 will cut domestic output 15 percent to 84 million tons in the marketing year that began Oct. 1, according to the United Nations Food & Agriculture Organization. Consumption will be 89 million tons, according to Concepcion Calpe, a senior economist at the FAO.
The Philippines is accelerating imports for 2010 supplies after two storms destroyed about 1.3 million tons of rice. State-run National Food Authority plans to buy at least 1.45 million tons by December, including the scheduled purchases of a total 1.2 million tons in two record tenders on Dec. 1 and Dec. 8, Romeo Jimenez, director of the state food buyer, said today.
Rice?s looming rally contrasts with sagging prices for other agricultural commodities. Wheat futures are down 7.5 percent this year in Chicago after global output jumped to a record. As of Nov. 13, corn is little changed this year as farmers in the U.S., the world?s biggest producer, neared completion of their second-largest crop ever.
?Rice Crisis?
?There is a strong possibility we?ll see a rice crisis next year as India faces drought, and Indonesia may feel the pinch of El Nino weather,? Asia Golden Rice?s Sarunyu said in an interview Nov. 9. Prices may top $1,000 a ton should the Thai government decide to maintain its stockpiles rather than export them, he said.
An El Nino weather pattern is brewing, with sea surface temperatures at least 1 degree Celsius (1.8 degrees Fahrenheit) above average across much of the central and east-central equatorial Pacific Ocean in the four weeks ended Nov. 7, according to a Nov. 9 report by the U.S. Climate Prediction Center.
The FAO is holding a world summit on food security starting in Rome today. Food prices in 31 poor countries remain ?stubbornly high,? the organization?s Director General Jacques Diouf said in Rome on Nov. 11, and more than 1 billion people suffer from hunger.
The FAO Food Price Index, which tracks cereals, sugar, meat, oils and dairy, gained for a third month to 158 in October. The index peaked at 213.5 in June 2008 before plunging to 139 in February amid the global economic crisis.
?Ripe? Fundamentals
Rice production has lagged behind demand in four of the past eight years, and rising consumption is expected to erode global stockpiles by 41 percent to 85.9 million tons in the 2009-10 marketing year, down from a record 146.7 million tons in 2001-02, according to the U.S. Department of Agriculture.
?If we start having problems -- weather problems, production problems -- the price of rice is going to skyrocket over the next decade,? Jim Rogers, chairman of Rogers Holdings, said in an interview Oct. 12. ?When it happens, I don?t know. But I know that the fundamentals are ripe.? Rogers, based in Singapore, predicted the start of the commodities rally in 1999 and is the author of books including ?Investment Biker.?
Farmers are struggling to squeeze more crops from each acre while demand increases with a growing world population. Limited growth in per-acre yields is ?a major reason for the imbalance between long-term demand and supply,? according to the Laguna, Philippines-based International Rice Research Institute. Average annual yield growth slowed to 1.4 percent from 1990 to 2005, down from 2.14 percent during the previous two decades, it said.
Food Riots
In March 2008, global food prices soared 57 percent from the previous year, the UN reported. Around 40 people died in riots in Cameroon and at least seven were killed in Haiti as violence erupted over food shortages. The FAO reported food- related violence in Burkina Faso, Egypt, Indonesia, Ivory Coast, Mauritania, Mozambique and Senegal. In the U.S., Costco Wholesale Corp. and Wal-Mart Stores Inc.?s Sam?s Club limited bulk rice sales.
Global rice harvests will drop 2.3 percent to 448.6 million tons in the 2009-10 year from 459.1 million tons a year earlier because of the crop losses in India and the Philippines and cyclones, landslides, flooding and earthquakes that reduced production in Japan, Nepal, Pakistan and Taiwan, the FAO said in a report Nov. 10.
?Tight Situation?
Rice fields in the Western Hemisphere are also suffering.
The U.S. crop has been ?severely damaged? in the main growing area of the upper Mississippi River Delta, while drought cut plantings in South America?s largest producing region, the Mercosur, according to Dwight Roberts, president of the U.S. Rice Producers Association in Houston.
?It doesn?t take a genius to see we are in a real tight situation,? Roberts said.
As production suffers, demand will increase 1.2 percent to 451.3 million tons from 446 million tons a year earlier, according to the FAO.
The potential for lost production to send prices to records will be limited by a record wheat harvest and ample rice stockpiles, Calpe said in an interview Nov. 9.
Kellogg, based in Battle Creek, Michigan, declined to comment on its rice use. Last year, after wheat and rice prices jumped to records, the maker of Froot Loops and Rice Krispies announced at least three price increases for U.S. breakfast cereals because of rising energy and ingredient costs.
?While commodity costs have fallen as we expected, we?re still seeing overall cost of goods inflation versus last year,? Chief Executive Officer A.D. David Mackay said Oct. 29 during a conference call with analysts.
?Huge? Stockpiles
Thai rice inventories of as much as 6 million tons, triple the 2 million tons of last year, are ?a huge amount, if you take into account that total trade is 30 million tons,? Calpe said. ?I?m pretty sure they will have to release them soon.?
In addition, world wheat stockpiles swelled by 36 percent to 165 million tons this year from 121 million tons last year, according to the USDA. Consumers can turn to bread and wheat when rice prices jump.
?Do not extend what we saw in 2008 to the situation we have today,? Calpe said. ?This is not a reason for concern today. If in the 2010 season we again face problems, then we will start worrying.?
Sales to India and the Philippines will determine how high prices go, Samarendu Mohanty, senior economist at the International Rice Research Institute, said Oct. 28.
Record Imports
The Philippines held its first tender for supplies a month earlier than usual and may boost imports 30 percent to a record 2.6 million tons, the USDA forecasts.
India?s reserves, normally about 20 percent of the country?s consumption, are plunging as output falls faster than demand, said The Rice Trader?s Zwinger.
The Indian harvest will drop 16 percent, shrinking stockpiles to about 9.9 million tons by October 2010 from 17 million a year earlier, according to the USDA. The country may buy as much as 3 million tons abroad next year, becoming a net importer for the first time in 21 years, Mohanty said.
?If India imports 3 million tons, they?d become the world?s biggest importer,? said Mark Welch, an agriculture economist at Texas A&M University in College Station, Texas. ?Three million tons disrupts natural trade because they normally don?t import any.?
Three state-owned traders issued tenders for 30,000 tons in October. The response to offers hasn?t been announced, with one potential buyer, MMTC Ltd., saying last week it wouldn?t buy rice at ?high prices.?
?A country like India -- or China, for that matter -- they can absolutely not rely on a very thin market? for imports, Calpe said. ?They are market makers. If they come to the market to buy, they will see the prices skyrocket.?
To contact the reporters on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net; Luzi Ann Javier in Singapore at ljavier@bloomberg.net
Last Updated: November 16, 2009 08:05 EST
http://www.bloomberg.com/apps/news?pid=20601080&sid=aMlMojVDQ_E8#
:tiphat: Holly Deyo @ Millennium Ark