April 16, 2008

 

Asia Grain Outlook on Wednesday: Rice prices to keep rising on high demand

 

 

Rice prices are likely to keep rising during the rest of this week on global shortage of exportable rice surplus and continued strong demand.

 

At the Chicago Board of Trade, rice futures have been setting new record highs so far this week.

 

CBOT's May and July contracts hit all-time highs in Wednesday morning's electronic trade.

 

The May rice contract hit a record high of US$22.67 per hundredweight earlier in the morning, but at 0503 GMT was trading off highs, 41.5 cents higher than Tuesday's U.S. close, at US$22.58/hundredweight.

 

July rice hit a record high of US$22.98/hundredweight earlier, but was trading 43 cents higher at US$22.92/hundredweight.

 

Rice traders in Bangkok said they are eagerly awaiting the results of the Philippines tender on April 17 for the purchase of 500,000 metric tonnes to see the kind of price offers made, which could then set the tenor for near-term price direction.

 

Traders said an unprecedented US$1,000/tonne level for Thai white rice exports seems imminent.

 

"Prices are already at around US$900 levels, so it's quite certain that prices will hit US$1,000 soon; the question is how far will they rise from that level," said a trader in Bangkok.

 

However, an official of the International Rice Research Institute said earlier in the week supply pressure could ease in the near term as rice harvest is in progress in several Asian countries.

 

He said rice prices are also rising because of speculators holding on to stocks.

 

Traders said with a Japanese rice tender of 60,000 tonnes on April 22 and another Philippines tender for 500,000 tonnes scheduled in May, speculators are unlikely to release their stocks, anticipating further price gains.