Rice Panic Subsides As Prices Collapse

The panic in the rice markets has ended abruptly as supply hits the marketplace in a big way; five straight days of declining rice prices should ease fears of social unrest through Asia, and also at Sam's Clubs, which nearly incited riots by briefly rationing rice at the height of the panic.

Rice slumped for a fifth day, heading for the biggest weekly decline in almost four years, as Pakistan allowed overseas sales to restart and Japan said it may begin exports from stockpiles, easing tight global supplies.

Pakistan, the world's fifth-biggest exporter, has permitted shipments of 1 million metric tons after meeting local needs, Mohammad Azhar Akhtar, chairman of the Rice Exporters Association of Pakistan, said yesterday. Shipments were halted from May 2, the Business Recorder newspaper reported on May 6.

Rice reached a record last month as some exporters cut sales to ensure supplies, stoking concern that hunger and unrest may spread worldwide. The price fell 14 percent this week, the biggest weekly drop since July 2, 2004, according to Bloomberg data.

``The supply news from Japan and Pakistan has eased concerns over tight supplies,'' Hiroyuki Kikukawa, general manager of the research department at IDO Securities Co., said today from Tokyo. ``The supply news has helped keep speculators from hoarding.'' Bloomberg

Of course, there was never much danger of running out of rice; Dealbreaker's groundbreaking series of blog post on April 25th, which coincided with the peak in prices, alerted Wall Street to the existence warehouses full of grain:

The next move may be for the Commerce Ministry to release its Strategic Rice Reserves. No really. The government hordes rice in case of shortages here, the way the US government hordes oil. Dealbreaker

With the Asian contagion contained for the moment, Wall Street can focus on a bigger disaster, the cellar dwelling New York Yankees.

Rice Slumps on Supply, Heads for Biggest Weekly Drop Since 2004
Bloomberg

April 25th
RIce Rice and More Rice Posts
Dealbreaker
----------------------------------------------------------------------------------------------------------
The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

Comments:

<< Back to main