Global rice trade to slow amid recession

The world might experience frequent rice shortages and high prices for the staple as global trade slows, the International Rice Research Institute said.

The US Department of Agriculture (USDA) last month lowered its estimate for global rice trade this year to 29.44 million tonnes from 29.52 million tonnes in February. That compares with 29.42 million tonnes in 2008, and 32 million tonnes in 2007.

USDA’s paring of forecast “points to lower trade and the risk of making shortages and high prices more frequent,” said Samarendu Mohanty, head of the IRRI’s social science division in a report today.

Rice futures rose to a record $25.07 per 100 pounds in April last year as growers including Vietnam, India and Egypt curbed exports to secure supplies. Lower global trade might once again prompt countries to restrict shipments, Mohanty said.

“The future stability of the rice market hinges on re-establishing relationships between exporters and importers,” he said in the report.

May-delivery rice was at $12.82 per 100 pounds in after-hours electronic trading on the Chicago Board of Trade at 6:26 pm Singapore time. Futures have fallen by half from the peak as the world economy tipped into recession, cooling demand for commodities, including grains.

Growth in demand for the staple may exceed the expansion in output this year, as the recession forces people to consume more grains in place of meat and farmers struggle to secure loans as banks hoard capital, Robert Zeigler, the institute’s Director General said on March 19.