April 30 (Bloomberg) -- Rice futures fell to a two-week low on speculation record prices will encourage farmers to plant more crops and governments to boost supplies, easing a food crisis that threatens to cause hunger on every continent.

The staple food for half the world dropped for a fifth day in Chicago and has retreated 11.6 percent from its April 24 peak after the United Nations pledged yesterday to set up a task force to tackle the ``unprecedented challenge'' of rising prices.

Thailand, the world's biggest rice exporter, said it will release 2.1 million metric tons from state reserves while Vietnam banned speculators from its market. Rice has doubled in the past year, stoking social tensions from Egypt to the Philippines and prompting some countries to curb exports to build domestic stockpiles.

``It's an issue for food security and governments in the world have actively been responding to surging rice prices,'' said Kazuhiko Saito, strategist at Interes Capital Management Co. in Tokyo. ``The price had gone up too much and too fast.''

Rough rice for delivery in July fell as much as $1.025, or 4.5 percent, to $21.905 per 100 pounds, the lowest since April 15, in after-hours electronic trading on the Chicago Board of Trade and stood at $22.10 at 6:40 p.m. Singapore time. The price dropped as much as the exchange maximum the previous four days.

Thai Export Price

Farmers in the U.S., the world's third-largest exporter, planted 44 percent of their rice crop as of April 27, up from 26 percent a week earlier, the U.S. government said. Thailand and Brazil said they won't curb exports and Pakistan announced plans to sell 2.5 million tons of the grain.

Thailand will sell rice stored in state warehouses to domestic consumers as the government tries to keep a lid on soaring prices, Prime Minister Samak Sundaravej said yesterday.

The price of 100 percent Grade B White Rice, the benchmark export variety, fell to $854 a ton today from a record $894 on April 23, the first drop since September last year, the Thai Rice Exporters Association's Web site showed. The grain was sold at $327.25 on average in April last year.

``We could very easily see food prices moderating over the next few months,'' Subir Gokarn, Asia-Pacific chief economist at Standard & Poor's, said on a conference call today.

Food Challenge

Rice prices gained 12.5 percent in Chicago this month, heading for their ninth straight monthly advance. U.S. rice exporters reported sales of 25,800 tons in the week ended April 17, down 85 percent from a week earlier. U.S. planting of the crop by April 27 is also behind the five-year average of 58 percent for that date.

The country hasn't limited overseas sales and plans to ship 9 million tons this year, about a third of global exports.

Food prices are creating the biggest challenge the UN World Food Program has faced in its 45-year history, ``threatening to plunge more than 100 million people on every continent into hunger,'' the agency said April 22.

UN Secretary-General Ban Ki-moon said yesterday he will chair a new task force to tackle the situation. The crisis is an ``unprecedented challenge'' that has ``multiple effects on the most vulnerable,'' Ban said. ``We must feed the hungry,'' and ``full funding'' is needed, he said.

To contact the reporter for this story: Jae Hur in Singapore at jhur1@bloomberg.net

Last Updated: April 30, 2008 07:12 EDT