Rice prices may spike up despite better harvests

THE price of rice, the staple for half the world, may advance as consumers seek cheaper substitutes to wheat products and if drought spreads to China’s growing regions, according to the Laguna-based International Rice Research Institute.

“If drought in China continues, that would affect rice lands,” director-general Robert Zeigler said in a Bloomberg Television interview Friday.

The good news is that the country expects a “good summer harvest” that will help rice imports to less than 1 million tons this year, Agriculture Secretary Proceso Alcala says.

According to government estimates, rough rice production for the first semester may reach more than 7.6 million tons, 15 percent more than last year’s harvest of 6.6 million tons in the same six-month period.

The increase may be attributed to increased areas for rice farming by 9.6 percent.

Rice has lagged gains in other grains that helped to push global food costs to a record last month, according to a gauge from the Food and Agriculture Organization.

Rice might be “the commodity which is separating us from a food crisis,” FAO senior economist Abdolreza Abbassian said.

“There’s going to be steady upward pressure on rice prices, along with other commodities,”Zeigler said.

“The status of rice supply, being the number-one food staple, is going to have a major impact.”

Rough-rice futures gained 6.9 percent in the past year, compared with wheat’s 65-percent gain, narrowing the price difference between the two. Rice was at $14.18 per 100 pounds Friday, while wheat traded at $8.2725 per bushel. That wheat price is equivalent to about $13.79 per 100 pounds.

“Rice typically lags behind wheat prices by a few months,” Zeigler said.

“As people substitute rice for wheat, that just increases demand” for rice.

Global rough-rice production was forecast to rise to a record 700.7 million metric tons in 2010-2011, exceeding demand by more than 6 million tons, the FAO said last month. That compares with production deficits seen in wheat and corn.

(Source: http://www.manilastandardtoday.com/insideNews.htm?f=2011/march/5/news4.isx&d=2011/march/5)