skunk.works : Reis
World rice prices may be set for another sharp spike with leading exporter Thailand expected to cut supplies starting this month.
Domestic prices of the staple have surged 50 percent since January, and Thai farmers are reported to be hoarding rice on hopes of further increases, traders said Wednesday.
Thailand is the world's biggest rice exporter but producers are now reluctant to meet commitments with the strength of the Thai currency, the baht, and high domestic prices acting as major deterrents.
Exporters who have suffered steep losses in fulfilling commitments made at the beginning of the year are expected to scale back supplies starting April. Traders in Hong Kong and the Philippines said they haven't yet received official notification from exporters in Thailand warning them about lower exports.
""What I know from our counterparts in Bangkok is that they too cannot get hold of any supply at the moment. Supply there is just too tight right now. I think most suppliers are focusing on their domestic market,"" said Guia Manay, rice trader of Daewoo International.
India and Vietnam, the other major rice exporting nations, have already announced curbs on exports, but lower supplies from Thailand may have even more serious implications for global prices of the commodity.
Vietnam said last week that it will limit rice shipments to 3.5 million tonnes, lower than the 4.5 million tonnes exported last year. Consumer price inflation in Vietnam hit a 12-year high in March.
India, which is also struggling to rein in inflation, banned non-basmati exports on Monday in a bid to ease prices of rice in the local market. Wholesale price inflation in India hit a 14-month high the week of March 15. Rice exports out of India in 2008-09 are expected to fall to a fraction of the 5.5 million tonnes exported last year.
Meanwhile in Hong Kong, which gets 90 percent of its rice supplies from Thailand, traders believe prices are likely to rise another 30 percent with major exporters cutting back on supplies.
Consumers have been buying unusually large amounts of the commodity, fearing a likely shortage in the near term.
""I expect the price of Thai rice to go even higher next week,"" said Ms Wai, a shopper in a supermarket chain in Hong Kong's Wan Chai business district. Wai bought 5 kilograms of rice on Wednesday, an amount she concedes is substantially higher than her family's monthly consumption of the staple.
The local administration has been quick to move to allay fears of a food shortage, saying that imports undertaken by stockholders between April 1 and June 30 are higher than in the same period of last year.
""We understand that recent price increase in Thai rice is mainly attributable to exchange rate changes and a global shortage of rice supply,"" the Hong Kong Trade and Industry Department said in a press release on Monday.
The government has also instructed stock holders to hold reserves sufficient for 15 days which will be released in case of emergencies.