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Rice takes center stage

Agriculture.com Staff 04/18/2008 @ 6:37am

The rice futures chart looks like the chart of Minneapolis wheat in February-or worse. Not only have rice prices continually rallied like many other commodities, but this market is still going strong, when other markets have broken (wheat, soy) or at least stalled out (corn). Rice prices have doubled since last summer in a continuous march higher.

Because of this, rice is the poster child for the recent global discussion regarding food inflation, security and unrest since it is a staple for so many poor people in the world, especially in Asia.

Several producing countries have established export restrictions on rice, including Indonesia, India, Egypt and Vietnam. The largest exporter, Thailand, is still an exporter. The US has also been exporting-Thursday morning’s export sales report revealed sales at a five-month high. Production in recent years has grown only slightly. Plus the largest importer of rice, the Philippines, still has purchases to make this spring.

Just as the situation took many years to come to a head, it may take many years before there is a resolution or an adjustment. For rice, wheat and other coarse grains, world stockpiles (season ending carryout) peaked around the year 2000 and have been sliding ever since.

Wheat is the closest to rice in terms of its importance as a staple food product. And wheat will be the first crop harvested in the Northern Hemisphere. Watch the reactions of importers to the availability of new crop supplies. Wheat prices and demand will give the first clues about just how large the world’s appetite can be for basic food security.

The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.

The rice futures chart looks like the chart of Minneapolis wheat in February-or worse. Not only have rice prices continually rallied like many other commodities, but this market is still going strong, when other markets have broken (wheat, soy) or at least stalled out (corn). Rice prices have doubled since last summer in a continuous march higher.

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