Rice, corn prices soar on supply woes

CHICAGO (Reuters) - U.S. rice and corn futures rose to all-time highs on Tuesday, buoyed by concerns about tight world grain supplies and planting delays, traders said.

A rally in U.S. crude oil futures to record highs approaching $114 per barrel buoyed the commodities sector, lending additional support to grains.

On the Chicago Board of Trade, rough rice futures posted the biggest advances. Rice for July delivery was up more than 3 percent, rising its expanded 75-cent limit to peak at $22.49 per hundredweight, an all-time high for the market.

CBOT rice prices have doubled since last September while Asian prices have soared even more sharply since January, as big importers have rushed to build stocks on fears that supplies will become scarce as exporters clamp down on shipments.

While wheat and soybean prices have fallen back from record highs earlier this year amid signs of improving supply, rice and corn have taken the lead in the grains complex, unnerving policymakers worried about inflation and, increasingly, unrest.

U.S. President George W. Bush on Monday announced $200 million in emergency food aid, a day after top finance and development officials from around the world called for urgent steps to stem rising food prices, warning social unrest would spread unless the cost of basic staples was contained.

A global decline in rice stocks in recent years coupled with export restrictions from big suppliers including Vietnam and India has fueled rice's gains this year, said Kenji Kobayashi, a grains analyst at Kanetsu Asset Management in Tokyo.

It has also encouraged hoarding.

"There is almost daily news about rice now in the regular media, and there is a growing interest in it," he said.

U.S. CORN PLANTING OFF TO A SLOW START

Corn has staged a renewed rally on concern about slow U.S. planting progress because of wet weather.

CBOT corn futures climbed 2 percent on Tuesday, with the deferred July 2009 contract setting an all-time high at $6.43 per bushel.

The front May contract reached $6.09-1/2, nearing the record high for a front month of $6.16, set last week.

Corn futures are up 30 percent so far this year.

The U.S. Department of Agriculture said in its first crop progress report on corn late Monday that 2 percent of the U.S. crop had been planted, compared with 4 percent a year ago and lagging the five-year average of 7 percent.

It was the slowest start for U.S. corn planting since 1993, said Wachovia Securities analyst Bill Nelson in St. Louis.

"It's very early, and the numbers can change in an hurry with good weather, but that's emblematic of how slow we're going," Nelson said.

Farmers had hoped to get an early start with fieldwork to maximize yield potential. Supply issues will be key this season, given strong demand for corn from the livestock, ethanol and export sectors, and USDA's projection for an 8 percent drop in U.S. corn seedings for 2008.

"It's going to be a real struggle with a few of these fields. And with U.S. and world supplies so tight, there is hardly any give at all," Nelson said.

CBOT May wheat was up 10 cents at $9.06 per bushel, following the firm trend in corn and rice.

Wheat also drew support from reminders of scarce global supplies. Kazakhstan on Tuesday joined other Black Sea grain exporters in curbing shipments, suspending wheat exports until September 1 to combat double-digit inflation.

May soybeans were up 17-1/2 cents at $13.90 per bushel on prospects for an extended stretch of U.S. export business due to concerns about supplies from Argentina, where talks continue between the government and farm workers after a recent strike restricted supplies.

Sources familiar with Chinese government trading said Beijing had bought 150,000 tonnes of soyoil and 300,000 tonnes of soybeans for state reserves last week.

(Additional reporting by Michael Byrnes in Sydney, Sybille de La Hamaide in London and Miho Yoshikawa in Tokyo; Editing by John Picinich)