Global Rice Prices Don't Reflect Fundamentals.

Record rice price on the CBOT don't accurately reflect the global situation as supplies are adequate to meet short-term demand - so claimed by a senior executive from India's largest Basmati rice exporter.

"There is no immediate shortage of stocks, only a shortage of quotations (fewer bids) in the anticipation of higher prices, because countries such as Thailand, Vietnam, Pakistan and the U.S. are sitting on stockpiles of rice." said R.S. Seshadri, director of Tilda Riceland Ltd.

He said India's recent ban on rice export wasn't the key driver behind the run up in prices as the country exported 5.1 million metric tons of rice in the Oct-Jan period. This is 2 million tons more than the entire marketing year to September. "Price on the CBOT reflect just 5%-6% of the global rice production, which is controlled by three major producing nations of Thailand, Vietnam and the U.S.," Seshadri said.

Global rice production totals around 419 million tons, of which 29 million tons to 30 million tons is traded, and the rest is locally consumed. So, don't go rush to the nearest TESCO outlets just to stock up on rice.. Moreover, Thailand, the world's largest rice exporter, has doubled its rate of exports in the last six weeks. So when the new crop arrives from Thailand it will exert downward pressure on prices. However, specialty rice like Basmati and Jasmine, the tightness will continue as there is a physical shortage and demand is strong. And trading insider sources had indicated that Thailand has surplus rice in excess of 9-10 million tons.

It is just that the global rice market is shallow which exaggerates shortages and surpluses. The shortages of specialty rice only count for 4%-5% of total rice produced.