Chicago rice and corn prices hit all-time highs on supply worries

On the Chicago Board of Trade (CBOT), rough rice futures posted the biggest advances on Tuesday. Rice in Chicago surged 2.3 percent on Wednesday to $22.67 per 100 pounds on rising demand and export curbs from some producing nations, stoking global concern about inflation and the potential for social unrest. Rice is the staple food for half the world.

CBOT rice prices have doubled since last September while Asian prices have soared even more sharply since January, as big importers have rushed to build stocks on fears that supplies will become scarce as exporters clamp down on shipments.

"We've seen an unprecedented bull run in rice prices," Luke Chandler, senior commodities analyst at Rabobank Group, said in an interview today with Bloomberg Television. "It's almost becoming like a supply shock because the countries that rely on the imports aren't able to access the available sources."

Farmers in Arkansas, the biggest rice-growing state in the U.S., have planted just 2 percent of this year's crop compared with 31 percent last year after heavy rains, according to an April 14 report from the U.S. Department of Agriculture.

While wheat and soybean prices have fallen back from record highs earlier this year amid signs of improving supply, rice and corn have taken the lead in the grains complex, unnerving policymakers worried about inflation and, increasingly, unrest.

U.S. President George W. Bush on Monday announced $200 million in emergency food aid, a day after top finance and development officials from around the world called for urgent steps to stem rising food prices, warning social unrest would spread unless the cost of basic staples was contained.

Corn has staged a renewed rally this month on concern about slow U.S. planting progress because of wet weather. CBOT corn futures climbed 2 percent on Tuesday, with the deferred July 2009 contract setting an all-time high at $6.43 per bushel.

SUPPLY DISTRUPTIONS
China, Egypt, Vietnam and India, representing more than a third of global rice exports, have curbed sales this year. Indonesia, the world's third-largest rice grower, said yesterday that the nation would be able to export rice only after domestic stockpiles in state-run warehouses total 3 million tons.

South Korea said April 15 that Asia's fourth-largest economy will seek to farm rice and other grains overseas, potentially in eastern Russia, to secure a stable supply of food as prices surge.

Kazakhstan, the world's fifth-biggest wheat exporter, yesterday halted shipments of that grain until Sept. 1 to "ensure food security," according to Prime Minister Karim Masimo.

CBOT May soybeans closed 7-1/2 cents higher at $13.80 per bushel on prospects for an extended stretch of U.S. export business as Argentina struggles with labor problems. Talks continue between the Argentine government and farm workers after a recent strike that restricted agricultural exports.