Rice Jumps to Record, Corn Near High as Demand Outpaces Supply

By Glenys Sim

April 3 (Bloomberg) -- Rice climbed to a record and corn traded near its highest ever on speculation global demand for food will outstrip supply as governments curb overseas sales to safeguard domestic stockpiles.

Soybeans advanced for the third day and wheat gained as investors bought agricultural commodities on concern adverse weather may curb production and push down global inventories of grains that are already at their lowest for at least 26 years.

``We're looking at very strong fundamentals for corn,'' Kazuhiko Saito, a strategist at Interes Capital Management, said in a telephone interview from Tokyo today. ``The possibility of delayed planting in the U.S. is adding to the bullishness.''

Soaring food and fuel prices are stoking global inflation and forcing governments from China to India to take measures to protect local food supplies and avert social unrest. Rice, the staple food for about 3 billion people worldwide, has doubled in the past year, and crude oil, soybeans and corn reached records.

Rough rice for May delivery advanced 2.4 percent today to $20.26 per 100 pounds, or double a year ago, in Chicago as the Food and Agriculture Organization said global exports of the food will drop 3.5 percent this year as nations curb sales.

``The international rice market is currently facing a particularly difficult situation with demand outstripping supply and substantial price increases,'' said Concepcion Calpe, a senior economist at the FAO.

Corn Near Record

Corn for May delivery gained as much as 0.5 percent to $5.9875 a bushel. The commodity rose to a record $5.9925 a bushel yesterday on concern that rains in the U.S., the world's largest producer and exporter of the crop, will delay planting.

``We are seeing more fund activity in corn at the start of this quarter, which is helping push prices higher,'' said Interes Capital's Saito.

Indonesia, the world's third-largest rice producer, may join China, India, Vietnam and Egypt in curbing exports to secure domestic supplies, Agriculture Minister Anton Apriyantono said yesterday in a text message to Bloomberg News.

The world's poor ``are living very close to the edge as it is,'' said Robert Zeigler, director-general of the International Rice Research Institute in the Philippines. ``If they are pushed further, they are typically the first who will spark unrest.''

Consumer prices in China rose 8.7 percent in February, an 11-year high, and reached a 13-month peak in India. Chinese food prices, based on a government index, jumped 28 percent in February, the most since July.

Food Shortages

The United Nations warned in February that 36 countries, including China, face food emergencies this year, as stockpiles of grains such as rice drop to a 26-year low.

The Vietnam Food Association has asked its members to stop signing new rice-export contracts between April and June, following Prime Minister Nguyen Tan Dung's directive to cut delivery of the grain overseas.

Vietnam, one of the world's three biggest rice exporters, will reduce shipments this year to 4 million tons to ensure supplies domestically and curb inflation that's at its highest in more than a decade. The government also said it's considering a tax for rice exports.

Malaysia plans to step up efforts to import rice from other Southeast Asian nations to build reserves. The Philippines is buying the grain from an emergency regional stockpile and taking additional supplies from the U.S.