Rice price soars on fear of Thai curbs

Business Times 24 Apr 08;

World Bank sounds alert but Samak says exports won't be cut

(BANGKOK) Rice climbed to a record after World Bank officials said Thailand may restrict shipments, worsening a global food crisis.

'If a key exporter like this limits foreign sales, it would be very much like Saudi Arabia reducing oil exports,' said James Adams, vice-president of the bank's East Asia and Pacific department.

Rice has more than doubled in the past year. The grain rose as much as 2.3 per cent in Chicago yesterday and has climbed 28 per cent this month. Wheat, corn and soybeans gained to records this year.

Thailand, which ships one-third of the world's exports of rice, may follow its Asian neighbours in limiting sales, Mr Adams said in an interview. The more countries impose export constraints, the 'stronger the pressures become for Thailand to do the same,' he said on Monday.

China, Vietnam, India and Egypt have curbed sales abroad to safeguard domestic supplies and cool inflation.

However, Thai Prime Minister Samak Sundaravej said on Tuesday the nation won't impose curbs on overseas exports or distort prices. 'Thailand will lose the name of 'kitchen of the world' should it reduce shipments, he said.

Thai exporters said foreign sales have been hurt by high prices. According to Chookiat Ophaswongse, president of the Thai Rice Exporters Association, the country's rice exports may fall by a third by the end of the year as high prices erode demand.

The price of grade-B white rice, the benchmark export variety, rose 4.7 per cent in the past two weeks to a record, according to the association. Thailand exports almost twice the amount of rice as India, its nearest rival.

The price of the grain was set at US$894 a tonne yesterday, not including freight costs, the association's website showed. The grain was sold at US$854 on April 9, the previous posted price, and US$327.25 a tonne on average in the same month last year.

Rice futures in Chicago climbed to US$24.745 per 100 pounds yesterday and traded at US$24.605 at 11.51 am London time.

'Any move by Thailand to limit exports would create panic in the global market,' Kenji Kobayashi, a grain analyst at Kanetsu Asset Management, said in Tokyo yesterday.

Soaring prices may put basic foods beyond the reach of the poorest people, raising the risk of a 'silent famine' in Asia, a World Food Program official said on Monday.

A top European Union official yesterdy urged the World Trade Organization to pressure food exporters to prevent a worsening of the food crisis.

'The WTO stands for free trade. It needs to exert its pressure and influence to reduce tariffs and thereby encourage trade,' EU Trade Commissioner Peter Mandelson said in Tokyo. 'It's also got to stand up against export restrictions, export taxes, which too will stop the free flow of trade in foodstuffs and agricultural produce.'

He said increased aid was needed to help developing countries deal with immediate shortfalls.

His comments came a day after a concerned Japan, which relies on imports for most of its food, said it would propose the WTO set clear rules on food export restrictions.

Commodity prices are in their seventh year of gains. The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials more than tripled in the past six years as global demand led by China outpaced supplies of crops and metals. -- Bloomberg, Reuters