Thai Rice Stockpile Offers Some Relief
Aug 07, 2012 03:57 AM EDT | By Sharon Robinson
At a time when the world is reeling under rising food prices and a dwindling lack of supply to food demands, rice may be the grain to which everybody will turn to.
Major rice producing countries are set to reap a record harvest in rice. Thailand especially is hoarding a vast amount of rice, in an effort to combat the approaching food crisis.
As of July, Thailand bought 11 million tonnes of rice. According to predictions by the US Department of Agriculture (USDA), paddy fields will yield 1.1 million tonnes more milled grains. Benchmark 5 percent Thai white rice will drop 14 percent to $480 a ton by December 31, according to the median of 10 estimates from traders and analysts surveyed by Bloomberg.
The exports of rice, which is the staple food for half the world, may go up by 2.6 percent, the USDA further added. Thailand's rice hoard may be cut to make space for the next harvest. In other words, the rice shipments, along with Thailand's rice hoard, may offer some respite against low grain reserves.
"Rice is the only bright spot which is keeping us away from a global food crisis," Abdolreza Abbassian, a senior economist at the UN's Food & Agriculture Organization inRome, told the Bloomberg. "The corn situation is very worrisome, while with wheat, the overall supply situation is still adequate."
Rough rice futures is currently going for $15.92 per pound at the Chicago Board of Trade, after a rise of 7 percent.
Thailand has been able to expand its rice reserve, thanks to a rice pledging programme re-introduced by Prime Minister Yingluck Shinawatra. Although this programme is being blamed for the decline in Thai rice exports, and for Indian rice exports eclipsing Thailand, it has been able to boost the income of rural rice farmers.
Unfortunately this has made the price of Thai rice rather unattractive in the export market.
The country will continue buying rice and will only be selling some of its stockpile at the end of the year. But, to be able to sell it, the price would have to drop.