Thursday, April 03, 2008

High rice prices, why

The cheap rice that the Philippines usually imports from Thailand, Vietnam, other Asian countries, to my understanding, is the Thai rice 25% broken. About 4 years ago, its price was only around $165/ton. This week, it's $604/ton. The rise in rice prices became very pronounced in the first quarter of this year, and it looks to be continuing into the second quarter.

A friend from Jordan, Sufian, asked me what are the problems that affect high rice prices.

I have discussed that in my previous posting here. But quickly, high rice prices in the world today is caused by a combination of high demand (more people are shifting to rice, high population growth, etc.) and low supply (some rice lands were planted with corn or other bio-fuel crops, there were pest attack elsewhere, low rainfall and irrigation, etc.).

The role of some opportunist traders who manipulate rice prices by hoarding and hiding some rice supply is also a factor.

There are many other factors, both macro and micro. But the above will greatly explain the current phenomenon.

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