Thai rice hits new record, feeding food fears

By Apornrath Phoonphongphiphat

BANGKOK (Reuters) - Rice prices in Thailand, the world's top exporter, surged to $1,000 a tonne on Thursday as concerns about food security first triggered by a handful of Asian export bans spread as far as the United States.

This week's five percent jump takes prices to nearly three times their level at the start of the year, intensifying fears of social unrest in Asia as millions of the region's poor find themselves struggling to pay for staple goods.

The surging price of fuel and food, which some analysts attribute to panic buying by both consumers and governments rather than a dire shortage of supply, has so far sparked riots in Africa and Haiti, but not Asia.

Having started with India's imposition of export curbs to protect domestic supplies last year, the crisis was felt in the United States this week, with major retailers saying they had started to notice signs of panic buying.

Sam's Club, a unit of retail giant Wal-Mart, said on Wednesday it was capping sales of 20-pound (9 kg) bulk bags of rice at four bags per customer per visit to prevent hoarding.

The previous day, rival Costco Wholesale Corp said it had seen increased demand for items such as rice and flour as customers, worried about global food shortages, stocked up.

"Everywhere you see, there is some story about food shortages and hoarding and tightness of supplies," said Neauman Coleman, an analyst and rice broker in Brinkley, Arkansas.

NEW ERA?

In Bangkok, some traders said Thai 100-percent B grade white rice, the world's benchmark, could hit $1,300 a tonne due to unsated demand from number-one importer the Philippines, which fell well short of filling a 500,000 tonne tender last week.

Manila said on Thursday it had increased the size of another tender on May 5 to 675,000 tonnes from 500,000 tonnes, putting yet more heat under the price of a grain that for decades moved sedately between $200 and $300 a tonne.

There is also a big question mark over Iran and Indonesia, two countries that normally buy as much as 1 million tonnes of Thai rice each year but which have bought nothing so far in 2008 because of the soaring prices.

Indonesia's trade minister said on Thursday her country can meet domestic demand for rice this year, avoiding the risk of social unrest, thanks to a bumper rice harvest, curbs on rice exports and subsidies for the poor.

"If the production of rice is as planned for this year, I think we can feel pretty okay that it's going to be stabilized," Mari Pangestu said in an interview.

Even though some analysts say the price, part of a wider global rally in crop prices, is based on jittery governments rather than fundamentals, Thailand's top exporters say the world is now set for an era of expensive food.

"Prices will remain firm for the rest of the year," Chookiat Ophaswongse, head of the Rice Exporters Association in Bangkok, told Reuters.