In Asia, Rice Glut But Higher Prices

[jon46]

Wall Street Journal

 

BANGKOK—Asia is awash in rice, as favorable weather and government support for farmers combine to produce a bumper crop.

 

The glut is driving down prices for big rice importers in Africa and China. But consumers in some of the biggest rice-producing nations, including Thailand and India, are paying higher prices as surplus supplies sit in government warehouses. Asia's surplus will have little impact in the U.S., which produces different varieties of rice.

 

 

 

 

 

 

 

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World rice stockpiles are expected to rise 2% this year. Above, rice stored at a mill in Suphan Buri, Thailand.

 

When traveling by train from New Delhi to neighboring states, a common sight in the countryside is rice piled high on wooden plinths, protected only by plastic tarps. In Thailand, the government has considered using a warehouse at the city's old airport to store rice because other storage facilities are full.

 

The surplus is the result of good weather and government programs that encourage rice growing. World rice stockpiles are expected to rise 2% this year, the ninth consecutive annual increase, according to the London-based International Grains Council.

 

Analysts see the glut getting worse. Thailand, a top exporter, is trying to sell some of its own 17 million-ton surplus, the result of a subsidy program in which the government bought rice from farmers at above-market prices. India, the world's biggest exporter, is expecting near-record harvests in a couple of months, as is Pakistan. Meanwhile, demand from large importers, including the Philippines and Nigeria, is dropping.

 

"If Thailand is successful in offloading its rice, it will certainly put downward pressure on prices," said Darren Cooper, a senior economist with the International Grains Council.

 

The council's index of global rice prices fell to 200 on Friday, its lowest since September 2010 and down almost 5% this year. However, prices vary widely from country to country, because rice is largely sold where it is produced. Just 8% is traded internationally, compared with about 20% for wheat and 36% for soybeans.

 

 

In Vietnam's spot market, prices are down about 5% this year, with one of the most heavily traded varieties, 5% broken rice, trading at about $390 a ton. In Thailand, 5% broken rice for export trades at $475 a ton, down 16% this year.

 

The only widely traded rice futures contract, offered by CME Group Inc. and reflecting U.S. prices, is up 7% this year, ending Tuesday at $15.895 for 100 pounds. The two markets tend to move independently.

 

The tightly regulated and fragmented rice market means consumers and the needy have seen little benefit from the oversupply. Some aid groups favor handouts before stocks deteriorate, while others said governments should encourage a move to other crops by cutting guaranteed prices to farmers.

While farmers have benefited in Thailand, prices in supermarkets there are up 10% since 2011 due to tight supply. Even as government stockpiles ballooned, traders in Thailand imported rice from Cambodia and Vietnam. The government, which is subsidizing farmers' income by buying rice at higher prices, is reluctant to sell it cheaply in the domestic market.

 

 

 

 

 

 

 

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India's agricultural policies have had a similar impact on its domestic prices, economists said. "I have three school-going children to feed, and its tough on me," said Jaya, a housemaid, who lives in a single-room house in New Delhi's crowded Tughlakabad area and buys at least 22 pounds of rice each month.

 

So far, Thailand and other rice producers have stuck by their policies. The commerce ministry said Monday that the government's first sale from its stockpile this year is likely to move less than 100,000 tons, compared with a goal of 350,000 tons, as most offers to buy were too low. Traders said market prices are about $480 a ton, while bids for government sales are coming in at about $380 a ton because of concerns over quality.

 

Thailand is also trying government-to-government deals. Last week, it announced a sale to Iran of 250,000 tons, paid in euros, but didn't disclose the price. It was the first purchase of this type by Iran from Thailand since 2007.

 

The price Thailand demands for its rice will determine how low prices go elsewhere, said Tejinder Narang, a New Delhi-based adviser to global commodities trader Emmsons International Ltd. Prices of one of the most traded Asian grades, Vietnam's 5% broken rice, have slipped to about $390 a ton from $560 a ton in late 2011.

 

Vietnam last month launched a plan to give exporters interest-free loans to stockpile more rice to bolster prices.

 

Devinder Sharma, chairman of New Delhi-based nonprofit organization Forum for Biotechnology and Food Security, criticized the programs. "In countries such as Thailand and India hunger is still persistent, and it is a crime against humanity if rice gets rotten while poor people starve," Mr. Sharma said. "A better option would be to supply this grain for free to the poor."

 

Some traders and consumer groups have raised concerns that some long-stored rice may not be safe because of high levels of methyl bromide, which is used on crops in storage to prevent infestation by rice weevils and other insects. Rice has a shelf life of at least three years, if kept away from moisture, though even when dry it can be eaten by rats and insects if not properly protected. Still, even if part of this year's crop is destroyed, it would quickly be replenished by the next harvest, analysts said.

 

—Biman Mukherji in New Delhi and Owen Fletcher in Chicago contributed to this article.

[think_too_mut]

The article is rubbish. By an uneducated journalists.

 

First, they have to know that rice is not rice. Not same.

 

Thai rice can not be eaten in Japan. Ends up in rice cakes and sake. Never comes to the regular public.

Does not stick, can not be eaten with chopsticks.

 

Thai rice can not be eaten in India. Their rice is every bean for itself.

 

What Yingluck (the most beautiful PM in World's history) has done wrong is just what the French do every day.

 

If you were a farmer, would you go to the market or wait guaranteed price with no effort (to market it).

Very usual practice in EU. Block the roads with combines and tractors if not to your will.

 

At the end of the day, Yingluck has to be re-elected by Thais, not by the irelevants as WSJ and Boards like this one are.

 

Please, Wall Street criminals, tell Thais what to do? Rather, fcuk yourselves, be happy you are not arrested for destroying the planet in 2008.

 

Let Thais deal with their people. WSJ go and chase the sclerotic dictatures in the Middle East for their oil given by God, not Thais for their hard work to grow rice.

[Dexi]

" Yingluck the most beautifull PM in worlds history ".....

[think_too_mut]

I wish to see her in topless withouot the down part.

[pasathai1]

seen from afar it seems like a well thought out marketing plan.

[Flashermac]

" Yingluck the most beautifull PM in worlds history "

 

Compared to Golda Meir?

 

[baa99]

 

 

[think_too_mut]

Dragging junk from the net? OK, anyone can do that:

 

 

The Australian goose, nose up:

 

[cavanami]

...and we have elephant legs...

 

[Coss]

You objectify women for your own sexual needs, bad, bad, men....

 

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