The smallest increase in rice stockpiles in five years means global grain inventories will extend a decline that already drove food costs to a record.
Combined global stores of wheat, corn and rice will drop 2.5 percent to a four-year low as farmers fail to keep pace with demand, the U.S. Department of Agriculture estimates. Rice prices will rise more than 20 percent by December as inventories expand 1.1 percent, compared with a 29 percent gain in the past four years, a Bloomberg survey of 13 millers and traders showed.
While wheat and corn prices as much as doubled last year, rice retreated as the United Nations’ global food-inflation index jumped 25 percent. Rice advanced 15 percent since May, potentially worsening the lives of the 1.1 billion the World Bank says live on less than $1 a day. Wheat fell 20 percent since the middle of February on prospects for a bigger crop.
“World rice prices had been far more stable than other cereals,” saidConcepcion Calpe, a senior economist at the UN Food and Agriculture Organization in Rome. “Now this is changing and rice is rallying, the international situation is likely to worsen. Wheat may become the stabilizing foodstuff.”
Thailand, the biggest shipper, is bringing back a policy of buying rice from farmers at above-market prices for storage. Exports fromVietnam, the second-largest, may drop 6.9 percent, according to the FAO. Farmers in the U.S., the third-biggest shipper, will harvest 20 percent less after planting more corn and wheat in response to rising prices, the government says.