Rice price hits new high on global markets

The prices of rice in Thailand, the world’s top exporter, surged to a record high above US$1,000 (S$1,360) a tonne yesterday as fears of a global shortage spread as far as the United States.

Thai 100 per cent B grade white rice, the world’s benchmark for global trade, was quoted in a range of US$1,000 to US$1,080 per tonne.

This week’s 5 per cent jump takes prices to nearly three times their level at the start of the year.

Rice futures in Chicago also rose above US$25 per 45kg on Wednesday, but eased slightly in early trading yesterday.

The price surge, which started when India imposed export curbs last year and has since led to shortages and riots from Egypt to Haiti, has made its way to US shores.

Americans have been cleaning out the shelves at major retailers including Wal-Mart’s Sam’s Club and Costco Wholesale Corp.

On Wednesday, Sam’s Club said customers could buy only four 9kg bags of jasmine, basmati and long-grain white rice per visit. Its rival Costco has already limited customers to two bags of rice a day at some of its stores.

‘It is like a run on the bank. We don’t think there is a shortage; it is just increased shopping by customers who think there is,’ said Costco’s chief financial officer, Mr Richard Galanti.

But the upward surge of rice prices shows no sign of abating. In Bangkok, some traders said Thai 100 per cent B grade white rice could hit US$1,300 a tonne due to unsated demand from the No. 1 importer, the Philippines.

Pressure on supplies and prices increased on Wednesday, when Brazil became the latest country to suspend rice exports, following in the footsteps of India and Vietnam.

But Thailand, which accounts for nearly a third of all rice traded globally, has said it will not impose any curbs. Yesterday, a Thai government spokesman reiterated that the country will meet all export commitments.

Mr Wichianchot Sukchotrat was speaking in Kuala Lumpur, where Thai Prime Minister Samak Sundaravej met Malaysian leaders, during which food security was a key topic of discussion.

‘We don’t need to restrict Thai exports because in the next few months, a new crop will come out,’ the spokesman said.

In Singapore, where most rice imports come from Thailand, importers say it is getting more difficult to hold back on price increases given the more frequent, and steeper, price jumps in global markets.

Singapore’s biggest supermarket chain, NTUC FairPrice, said it will moderate price increases and stagger them to soften the impact on consumers.

Said its spokesman: ‘Our current rice stockpile was secured at a lower price a few months ago. Going forward, we have to import rice at prevailing market rates which have increased by more than 100 per cent since March last year.’

The Government has highlighted three measures to help the needy: bigger and earlier payouts for those on the Public Assistance Scheme; two instalments of Growth Dividends; and targeted help from the citizens consultative committees (CCCs).

Most of the CCCs that spoke to The Straits Times said there was an increase in the number of people approaching them for help.

Rising butter prices hit bakers

By Natalie Soh, ST

The price of another staple – butter – is on the march north, leaving bakers here and abroad reeling from the impact.

In the last year, wholesale prices have more than doubled, and food companies here say consumers will have to foot the bill.

One major baked goods and cake manufacturer told The Straits Times that it pays US$4,000 (S$5,600) to US$4,200 per tonne of butter now.

This is up from about US$1,700 per tonne in January last year.

Some bakers have, in turn, passed it on, upping the price of baked goods by 20 to 30 per cent. Even those who have been holding out say they cannot maintain prices much longer.

Some firms are switching to cheaper alternatives, such as margarine.

The major supplier of butter products here, New Zealand company Fonterra, said it has seen the global price of butter double in the last year.

In January alone, the average retail price of the spread jumped a further 17 per cent, from $2.90 to $3.40 per standard block.

Voracious demand from China and India, along with a lingering drought in Australia, a major dairy producer, has forced global prices upward.

A lower-than-expected supply from South America, due to export restrictions, has added to the shortage.

Still, Fonterra’s spokesman said that there is enough butter stocks here to meet demand for now.

Soya prices soar as shortage hits home

By Jessica Lim, ST

A worldwide shortage of soya beans has hit Singapore hard: Importers say prices have doubled, and the cost of items such as tofu could go up soon.

Though rising food prices have affected several items, soya beans are the worst hit – from $600 a tonne a year ago, prices are now at about $1,200.

That spells bad news for a group already hit by rising prices: the less well-off.

Soya products such as tofu are a staple food for them, said Ms Anna Jacob, a nutritionist at private nutrition consultancy firm NutriVentures.

She explained: ‘Soya beans are cheap, a good substitute for meat and protein-rich.’

Already, prices of soya bean products have risen in the past few months – at some places, a cup of soya bean milk costs 20 cents more. But more increases could follow.

The price hikes are down to a lack of supply from big producers such as the United States.

Farmers there are opting to plant maize and wheat – which are fetching sky-high prices because of an increased demand for bio-fuels – instead of soya beans.

Higher demand from China has also contributed to the increase in prices.

The effects have hit most Asian countries, because soya products are widely consumed there in various forms.

In Indonesia, for example, thousands of tempeh (fermented beancurd) and tofu manufacturers and vendors went on strike last month to protest against the rising prices.

And just this month, Japan initiated a fresh round of price hikes on soya products.

Soya beans are big in Singapore too, and importers last year brought in 18,974 tonnes of the stuff, which was eventually turned into products such as taupok (fried beancurd), soya sauce and tofu.

The larger manufacturers of soya bean products said they are struggling to maintain profits, and will be negotiating among themselves on a price increase soon.

Industry insiders said this could mean a 12 per cent rise in the prices of packaged soya bean products in the next few weeks.

Major tofu producer Unicurd, which supplies about 60 per cent of the packed tofu in Singapore, said it has seen profit margins fall by about 30 per cent since last year.

Said its general manager, Mr Allan Tan: ‘Tofu is a cheap alternative for meat and just as protein-rich. It’s a poor man’s food so we try our best to keep prices unchanged.’

Tai Hua Food Industries, which produces about 5,000 tonnes of soya sauce a year, has increased prices of the soya sauce it exports – about 35 per cent of what it produces – but has kept prices of products sold here unchanged.

Both producers said they cannot keep prices down for much longer.

Previous price rises have already hit buyers and sellers.

At Tekka Market, tofu seller Ng Boon Hwee said he tagged another five to 10 cents to the price of each piece of tofu sold – an increase of 20 per cent per piece – last month.

When The Straits Times spoke to him, the 55-year-old shook his head, pointed at his stock of 150 pieces of tofu, and said he had raised prices only three times in the past 30 years.

He added that he had never seen costs so high. In fact, he said, he had to buy fewer pieces to stock his shelves because tofu is so expensive now.

A Straits Times check of eight other shops – from those in wet markets to beancurd outlets such as House of Yummy Beancurd – show that all have raised their prices by 12.5 per cent to 25 per cent over the past two months.

Beancurd chain Selegie Soyabean started charging 20cents more for a soya bean milk drink at the start of this month.

Owner Andrew Koh, 45, said a few customers ’showed black faces’, but became more understanding after he explained the situation.

The bad news is that it does not look like the situation will ease any time soon.

A spokesman for Canadec, the major soya bean importer here, said the situation will not get better ‘for the next two or three years’.

He said: ‘This is because demand for crops like wheat and maize is still high, so acreage for soya beans is limited.’