Sorry about the headline, I seem to be channeling the the NY Post this morning.
U.S. farmers are planting the fewest acres with rice since 1989 just as global demand surpasses production for the first time in four years, driving prices as much as 12 percent higher by December.
Plantings in the U.S., the third-biggest shipper, may drop 25 percent this year because growers can earn more from corn and soybeans, according to the median in a Bloomberg survey of nine analysts and farmers. Rice, the staple food for half the world, declined 4 percent last year, extending a 2.9 percent drop in 2009. The other crops jumped 34 percent or more.
“Why would you want to take that risk to plant rice, knowing that your income is going to be way down?” said Terry Hatley, a farmer in Marked Tree, Arkansas, who may not plant any rice this year after growing the crop for more than three decades. “Farming is a business, and you’ve got to look at the economics of it. Now, the economics on rice are very dim.”
Bangladesh, South Asia’s biggest buyer, doubled a target for imports in 2011 to curb prices, the Directorate General of Food said last week. The Philippines, the world’s largest importer, will probably start buying next month, according to the National Food Authority. While global stockpiles are predicted to be 26 percent higher this year than in 2007, consumption will gain 3.4 percent and harvests 2.6 percent, the U.S. Department of Agriculture estimates.
The Thailand export price, the benchmark in Asia, may climb as high as $600 a metric ton by December from $534 on Jan. 26, a gain of 12 percent, according to the median estimate in a Bloomberg survey of eight traders, exporters and analysts.
‘Acreage War’“The acreage war has begun,” said Dennis Delaughter, the owner of Progressive Farm Marketing Inc. in Edna, Texas, who expects futures traded on the Chicago Board of Trade to advance as much as 20 percent to a three-year high of $18 per 100 pounds by November. “Of all the futures markets in the agricultural sector, rice is the sleeper,” said Delaughter, who correctly predicted an 11 percent gain in prices last March.......Rice futures climbed the 50-cent exchange limit today in Chicago to $15.51 per 100 pounds, still 38 percent below the record $25.07 reached in April 2008. Traders anticipate prices no higher than $16.265 through January 2012, Chicago Board of Trade data show....MORE