Three words: Peak Rice Crisis – the budding idea that planet earth is rapidly running out of its last long grain. See also: “Rice Shortage on the scale of the potato famine in Ireland.” (Manila Times)
This is no joke. From Southeast Asia to North America, the alleged rice scare has sparked riots, arrests, relief lines – and now, rationing. To wit: The two biggest retail warehouse chains in the U.S. – Wal-Mart and Costco – have placed limits on the number of 20-pound bags of basmati, jasmine, and white rice each customer can purchase per day.
Here’s what we do know: CBOT rice futures have soared 81% in 2008 alone to never-before-seen heights. Contrary to wildly popular belief – “Chicago rice hits record high on global supply fears” (Guardian, UK) –the rally has little to do with a scarcity in supply.
In the April 18 Daily Futures Junctures “Weekly Wrapup” section, editor Jeffrey Kennedy presented an eye-popping close-up of Rough Rice. One look at this picture and you can see where the gains in this grain may end. Learn more.
The reason we know this is because there IS No Scarcity In Supply to speak of.
Check it: According to recent projections by the U.S. Department of Agriculture, rice stocks in 2008 will be 8.3 million tones, nearly unchanged for the past seven years.
Regarding demand – well, let’s put it this way. In the big picture, rice is as much a staple of the U.S. diet as monkey brains. Technically speaking: U.S. consumption of rice is one-tenth that of Asia, all the while 50% of the domestic rice crop is exported.
As for the region in which rice is a culinary mainstay, Asia, this April 24 news item says a mouthful: “Do Not Panic: Asia Has Enough Rice Supply.” Last count by industry heads reveals “ample reserves… and buffer stocks sufficient for local consumption.” (Reuters)
Again: There is no supply shortage of rice. There is FEAR of a supply shortage – which, in turn, is causing the world’s key sellers of rice to halt exports for their own future benefit AND restaurants/individual customers to hoard their provisions – which, in turn, causes prices to rise.
Scarcity is not causing the price of rice to rise. Scare-city is a self-fulfilling prophecy.
Don’t get caught in the psychological grip of fear. Get the objective FACTS via a risk-free subscription to Futures Junctures Service today. In the April 18 Daily Futures Junctures “Weekly Wrapup” section, editor Jeffrey Kennedy presented an eye-popping close-up of Rough Rice. One look at this picture and you can see where the gains in this grain may end. Learn more.