Rice futures rose, capping the biggest weekly gain since 2009, on concern that global demand will outpace supplies as adverse weather cuts production in Asia and the U.S.
The main crop in Thailand, the world’s biggest exporter, may drop 7 percent this year after floods, according to the country’s agriculture minister. The United Nations this week cut its global-output forecast. The quality of rice from Arkansas, the biggest U.S. producing state, has deteriorated because of dry weather, said Milo Hamilton, the president of Firstgrain.com, an advisory service in Austin, Texas.
“There are little negative-production changes happening in rice all over the place,” Hamilton said. “We’ve just had a lot of dings all over the world.”
Rice futures for January delivery rose 23 cents, or 1.6 percent, to settle at $14.67 per 100 pounds at 1:15 p.m. on the Chicago Board of Trade. Prices jumped 9.4 percent this week, the biggest such gain for a most-active contract since March 2009.
World rough-rice production may drop to 697.9 million metric tons, the UN’s Food and Agricultural Organization said on Nov. 30. That’s 6.5 million tons lower than the agency’s forecast in June. Prices may triple in 18 months as supplies shrink and demand increases, Ed Peter, the chief executive officer of Duxton Asset Management Pte., said this week.
Smaller Thai Crop
In Thailand, production may decline to 21.66 million tons, Agriculture and Cooperatives Minister Theera Wongsamut said last week in an interview. That’s 3 percent smaller than the government’s Nov. 9 forecast. The worst floods in 50 years inundated about 15 percent of the country’s rice land, Theera said.
In the U.S., exporters sold 122,427 tons of rice in the week ended Nov. 25, the most in two months, the Department of Agriculture said yesterday. Last month, the USDA cut its forecast for domestic production by 0.3 percent to 241.6 billion pounds. The agency will update its estimates on Dec. 10.
A decline by the dollar supported rice futures, Hamilton said. The greenback was headed for the biggest drop in five months against a basket of major currencies, enhancing the appeal of U.S. exports.
Indonesia said yesterday that it agreed to buy 230,000 metric tons of Thai rice, bringing the country’s imports this year to 830,000 tons. Indonesia, Southeast Asia’s largest economy, returned to the rice market this year after two years of self-sufficiency, as production growth eased.