Rice Gains for Sixth Day on Increased Demand, Myanmar Cyclone

By Jae Hur
More Photos/Details

May 9 (Bloomberg) -- Rice gained for a sixth day after Malaysia secured 500,000 metric tons from Thailand and a cyclone damaged crops in Myanmar, adding further pressure to global food supplies.

``The cyclone damage in the country has again highlighted tight global supplies of rice,'' Kenji Kobayashi, a grain analyst at Kanetsu Asset Management Co., said by telephone from Tokyo today. ``The rice price is now set to retest the previous peak.''

Cyclone Nargis struck Myanmar's main rice-growing area on May 3, exacerbating a food crisis that's triggered unrest from Somalia to Haiti. Rice, wheat, corn and soybeans have risen to records this year, boosting hunger and severe malnutrition, according to United Nations Secretary-General Ban Ki-moon.

Rice futures rose as much as $1.03, or 4.6 percent, to $23.38 per 100 pounds in Chicago, and traded at $23.29 at 10:00 a.m. Singapore time. The contract, which has gained as much as 13 percent since May 1, has more than doubled in the past year and touched a record $25.07 on April 24.

Thailand, the world's biggest rice exporter, agreed yesterday to sell the shipment to neighboring Malaysia at market prices. ``If we don't buy now, the price might increase in the future,'' Malaysian Prime Minister Abdullah Ahmad Badawi said.

The benchmark export price of Thai 100 percent grade B white rice gained 10 percent to a record $941 a metric ton this week, according to the Thai Rice Exporters Association.

Export Curbs

``I cannot rule out the possibility that the rice price will go above $30 per 100 pounds in Chicago,'' said Kobayashi. There are ``export curbs by some exporters, dwindling stockpiles and hoarding in some consuming countries.''

Thailand is the only major rice producer that hasn't curbed exports this year as the World Food Programme warns of a ``silent famine'' caused by spiraling food prices. India banned overseas shipments to control inflation, and Vietnam also limited exports.

Japan offered to ship 60,000 tons of rice to the Philippines to help the world's biggest importer of the grain boost stockpiles, National Food Authority Spokesman Tomas Escarez said today in a telephone interview.

``Japan sent us a letter offering 60,000 tons as assistance,'' Escarez said from Manila, the Philippine capital. ``We're still negotiating the terms of that shipment, whether it will be in the form of a loan or whatever.''

The Philippines canceled on May 5 a tender to buy 675,000 tons of rice to build stockpiles after just one company submitted an offer. The nation will seek shipments ``aggressively,'' Agriculture Secretary Arthur Yap said on May 7.

Philippine Talks

The Philippines was also in talks with Thailand and Vietnam for long-term contracts that would allow the food authority to buy rice through government-to-government agreements, possibly eliminating the need for more tenders this year, Escarez said.

The Myanmar cyclone has stoked speculation, including from the Thai Rice Exporters Association, the country may be forced to abandon exports and seek supplies on the international market.

Myanmar had been expected to export 600,000 tons of rice this year, the Food and Agriculture Organization has said, citing the amount the government reportedly allowed exporters to buy from farmers. The Rome-based United Nations agency had forecast world rice exports at 29.9 million tons.

The five provinces that bore the brunt of the typhoon account for about two-thirds of the nation's rice output. The storm killed as many as 100,000 people and flooded 5,000 square kilometers (1,930 square miles) of farmland in the Irrawaddy delta.

``Time is running out to prepare'' for Myanmar's main rice- planting season, which starts early next month with the arrival of monsoon rains, the Food and Agriculture Organization warned.

Cyclone Nargis was ``the opening shot for the southwest monsoon season,'' AccuWeather.com Senior Meteorologist Jim Andrews said in a statement dated yesterday. ``Starting this weekend and going through middle of next week, it's going to rain periodically -- torrential rain at times.''

To contact the reporter for this story: Jae Hur in Singapore at jhur1@bloomberg.net
Last Updated: May 8, 2008 22:04 EDT

I got it form her.