Thursday, April 24, 2008

Rice Prices up 300%

It seems like it is a self-fulfilling shortage caused by speculators. Just like oil we have slack demand but supply is stopped even by a few 100K barrels for a few days and the price goes to an all-time high. In rice we have panic buying and hoarding by both the individual and governments and that is what is driving the price strait up.

After this week's over five percent jump rice prices stand nearly three times higher than the start of the year. With no sign of the rally relenting, as traders expect more buyers to come into the market, government anxiety about social unrest from the soaring cost of Asia's staple will deepen.

The price goes up due to speculation. Then Asian governments fearing rioting overreact and put curbs on exports and start hoarding their rice. Then we end up having record prices. It is all a self-fulfilling prophecy.

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