Bloomberg News

Flooding in Southeast Asia May Cause Food Shortages, UN Says

October 22, 2011

(Adds analyst’s comment in fourth paragraph.)

Oct. 23 (Bloomberg) -- Communities in parts of Southeast Asia face “serious food shortages” after flooding devastated rice paddies and other crops since the start of September and aid deliveries are disrupted, the United Nations said.

About 12.5 percent of rice farmland in Thailand has been damaged, along with 6 percent in the Philippines, 12 percent in Cambodia, 7.5 percent in Laos and 0.4 percent in Vietnam, the UN Food & Agriculture Organization said in an Oct. 21 report.

Crop losses may help sustain a 17 percent rally in rice futures in Chicago this year, adding pressure on food costs, and creating more problems for government leaders across Asia, where the grain is the main staple, said Lynette Tan, an analyst at Phillip Futures Pte. The UN Food Price Index of 55 commodities including cereals, meat, sugar and dairy rose to a record in February.

“Given that flooding in Thailand is not really getting any better, we see that going forward, there could be some room for prices to go up,” Tan said by phone from Singapore today.

Thailand, the world’s largest rice exporter, was forecast to account for 31 percent of the 34.2 million metric tons of global trade of the grain this year, according to the U.S. Department of Agriculture. Vietnam is the second-largest shipper, according to the USDA. The Philippines was the largest buyer last year.

Prices Jump

Rough-rice for January delivery rose 0.5 percent to close at $16.715 per 100 pounds on the Chicago Board of Trade on Oct. 21. The export price for the 100 percent grade B Thai white rice, the benchmark in Asia, gained 1 percent to $625 per metric ton on Oct. 19, taking gains this year to 13 percent.

Thailand may lose 6 million tons of rough-rice from flooding, paring the main harvest to 19 million tons, Apichart Jongskul, secretary-general of the Office of Agricultural Economics, said Oct. 21. The damage estimate does not include rice stored in warehouses that have been submerged in floodwaters, he said.

Thailand’s main harvest, which typically accounts for 70 percent of annual production, was forecast by the government at 25.8 million tons before the floods.

The Philippines lost almost 600,000 tons of milled rice from typhoons that struck the country, Lito Banayo, administrator of National Food Authority said Oct. 20. That’s equal to almost 17 days of demand, according to Bloomberg calculations, based on the national daily consumption.

--Editor: Edward Johnson, Jim McDonald

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

To contact the editor responsible for this story: Jim McDonald at jmcdonald8@bloomberg.net


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