Benchmark Thai rice prices leapt more than 5 percent to a record high above $1,000 a tonne on Thursday, and traders in the world's top exporter warned of further gains if buyers Iran and Indonesia step into the market.
Prices have now nearly trebled since around $383 in January, sparking food riots in African countries and Haiti and adding to growing fears that millions of the world's poor may soon struggle to feed themselves. Thailand's 100 percent B grade white rice, the world's main physical benchmark for global trade, was quoted in a range of $1,000 to $1,080 per tonne free on board, up from around $950 per tonne last week, according to a Reuters poll of five traders.
This year rice finally joined in a global rally in food crop prices amid a surge in demand from major importers who feared that export restrictions by key suppliers like Vietnam might leave them short, especially with global stocks having halved since touching a record high in 2001.
Some analysts say the sense of panic should subside as stocks rebuild and new crops reach the market, although sellers in Thailand remained bullish on the hope that other buyers would soon join Manila in topping up domestic stockpiles.
"Some exporters may quote a price higher than $1,000 a tonne if their costs are higher. Supply is still tight," Chookiat Ophaswongse, head of the Exporters Association, told Reuters.
"If the Philippines agrees to buy all of the rice offered at the tender last week, prices will go much higher," Chookiat said.At a tender in Manila, traders offered only 325,750 tonnes of rice, falling short of a requirement of 500,000 tonnes.
Traders said Manila might have to increase the volume it is seeking to buy in a May 5 tender by 100,000 tonnes to 600,000 tonnes. Iran and Indonesia, which traditionally each buy around 1 million tonnes of rice a year, have avoided Thai rice this year due to high prices.
But traders said they might jump into the market soon."If Iran buys rice from Thailand, Thai 100 percent B grade white rice would hit $1,300 a tonne," one exporter said. The Thai Rice Exporters Association, which sets a weekly notional floor price based on the median of trade, raised its recommended price for 100 percent B grade white rice to $894 per tonne on Wednesday, up from $854 per tonne last week.
Chicago Board of Trade July rough rice futures, a thinly traded domestic contract that is not considered a world benchmark, also surged to a record high of $25.010 per hundredweight on Thursday, having gained 80 percent this year. Chookiat said Thai prices could dip if the current high levels prompts African importers to cut back on their orders, but any set-back would likely be limited. "It would be a short-term corrective phase for Thai rice prices, but not a sharp drop. Prices will remain firm for the rest of the year," he said.
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