U.S. rice slips below $12 on Dow, Venezuela woes

CHICAGO, March 5 (Reuters) - U.S. rice futures fell below $12 per hundredweight for the first time in a week on Thursday burdened by the sinking equity markets and export woes, analysts said.

Chicago Board of Trade rough rice futures for March delivery RRH9 ended 18-1/2 cents weaker at $11.94-1/2 per hundredweight, hovering near a two-year low.

Grains traders use the Dow industrials .DJI as a gauge of demand and economic health. As the Dow fell more than 200 points and slid to a 12-year low, CBOT grains followed.

But rice got a second punch from news that Venezuela's President Hugo Chavez seized a rice mill owned by American food giant Cargill [CARG.UL] on Wednesday as he demanded the food industry produce cheaper rice. Chavez also threatened to take over Venezuela's largest private company, Empresas Polar.

Venezuela, the third largest buyer of U.S. rice this season, buys rough rice then processes it domestically.

"The drop in rice today is much more related to the stock market but the takeover is psychologically negative -- it's the uncertainty," said Ed Taylor, analyst with Firstgrain.com, a market advisory service.

But over the long run the country will still need rice, especially rough rice supplied by the United States, analysts say. Any negative impact appears limited.

"The larger focus today is whether or not the Iraqi Grain Board buys any U.S. rice," said Neauman Coleman, an analyst and rice broker in Brinkley, Arkansas, citing a recent tender for at least 30,000 tonnes of long grain rough rice, any-origin with results expected any day.

"Our prices are higher than other origins, but there are restrictions from those origins on quantity, so we'll wait and see," he added. "If we miss getting this milled rice business, things still look lower." (Reporting by Christine Stebbins; Editing by Marguerita Choy)