Rice prices likely to increase due to Thai floods

Rice prices may advance 19 percent after floods cut supplies in Southeast Asia, including in the biggest shipper Thailand, and that nation’s government started a state-purchasing program, according to the country’s largest packer.

The price of Thai parboiled rice may climb to $750 per metric ton on a free-on-board basis by year-end from $630, while the same product from India may gain to $500 per ton from $480, C.P. Intertrade Co. president Sumeth Laomoraphorn said in an interview in Bangkok. Parboiled rice is soaked, steamed and dried before milling, a technique that preserves vitamins.

Costlier rice may push up global food costs and elevate inflation, complicating the task for the world’s central bankers as they seek to sustain economic growth hurt by the euro zone debt crisis. Indian suppliers may benefit from sales not met by Thailand and the South Asian nation may become the world’s second-largest supplier, Sumeth, 50, said on Oct. 17.

“Thailand seems to have suffered the biggest damage,” Samarendu Mohanty, a senior economist at the International Rice Research Institute, said from Los Baños, the Philippines Tuesday. While Thai parboiled prices may rise 10 percent at most, India will boost shipments, Mohanty said by phone.

Thailand has been battling the worst flooding in five decades and the waters have hurt crops, damaged infrastructure and killed more than 300 people. The inundation may cut output of unmilled rice by 3.5 million tons, the Thai Rice Exporters Association said on Oct. 17. That’s 10 percent of last year’s harvest, according to Bloomberg calculations.

“We will see high prices until at least March,” said Sumeth, whose company is a unit of Bangkok-based Charoen Pokphand Group, Asia’s biggest animal-feed producer. “India’s loading capacities at ports won’t be able to cope.”

Rough-rice in Chicago, which has rallied 17 percent over the past year, traded at $16.33 per 100 pounds at 4:03 p.m. in Singapore. Thailand’s 100 percent grade-B variety, a benchmark that’s priced weekly, was set at $619 per ton on Oct. 12.

Parboiled and white-rice grades each account for about 35 percent of Thailand’s total shipments, according to the Thai Rice Exporters Association. African buyers accounted for 49 percent of all Thai shipments last year, according to the group.

Rice prices will also be driven higher by the Thai government’s new price-support program, Sumeth said, restating comments by exporters that the policy introduced this month by Prime Minister Yingluck Shinawatra will elevate costs. Bloomberg


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