Bloomberg News

Rice Jumps Exchange Limit to One-Month High on Asia Flood Damage

October 24, 2011

Oct. 24 (Bloomberg) -- Rice futures jumped the most permitted by the Chicago Board of Trade, advancing to a one- month high, as flood damage to crops in Southeast Asia boosted prospects for U.S. exports.

Storms since September damaged 12.5 percent of paddies in Thailand, the world’s largest exporter, and crops in the Philippines, Cambodia, Laos and Vietnam, the United Nations’ Food & Agriculture Organization said in a report dated Oct. 21. Floods and drought will cut U.S. output by 23 percent in the season that ends July 31, the government said Oct. 12. Prices have rallied 11 percent in the past two weeks.

“Thailand won’t be able to export as much, which will drive business to the U.S.,” Dennis DeLaughter, the owner of Progressive Farm Marketing Inc. in Edna, Texas, said in a telephone interview. “The U.S. doesn’t have very much rice yet, so it will pop up prices. We’re talking about some world trade shortages.”

Rough-rice futures for January delivery jumped by the CBOT’s 50-cent limit, or 3 percent, to settle at $17.215 per 100 pounds as of 1:15 p.m. in Chicago. That’s the highest price since Sept. 21, leaving the commodity up 19 percent from a year earlier.

Floods inundated more than two-thirds of Thailand, causing loss of life, damage to crops and livestock, closure of factories and severe damage to infrastructure, the FAO said. Damage to rice crops was estimated at 6 percent in the Philippines, 12 percent in Cambodia, 7.5 percent in Laos and 0.4 percent in Vietnam, according to the report.

Reduced supply

“It’s some of the worst flooding in over 50 years,” Shawn Hackett, the president of Hackett Financial Advisors Inc. in Boynton Beach, Florida, said in a telephone interview. “They will have a substantial reduction in overall supplies, and the damage to infrastructure means the supplies that are available won’t be able to get out of the country.”

Thailand was forecast to export 10.5 million metric tons this year, or 31 percent of global trade estimated at 34.2 million, according to the U.S. Department of Agriculture. Vietnam is the second-biggest shipper at 7 million tons, or 20 percent of the total.

China imported 488,900 tons in the nine months ended September this year, up 111 percent from the same period last year, the China Customs General Administration said today. Larger populations moving to the cities and problems with production are increasing the country’s demand, Jack Scoville, a vice president for Price Futures Group in Chicago, said in a telephone interview.

“They’ve more than doubled their imports, and that’s being construed as a sign of good demand,” he said.

--Editors: Steve Stroth, Millie Munshi

To contact the reporters on this story: Blair Euteneuer in Chicago at beuteneuer@bloomberg.net; Luzi Ann Javier in Singapore at ljavier@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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