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Costly food, supply concerns prompt Asian grains buying              
By Ahmad Fraz Khan

Asian buyers are snapping up more rice and cheap Australian wheat to boost food and feedstock security in the face of record high prices that policymakers fear could stoke popular discontent and damage their economies.

World Bank President Robert Zoellick said global food prices have reached “dangerous levels”, underlining the anxiety among governments keen to head off a repeat of the 2008 food crisis, which sparked riots in countries from Egypt to Haiti.

“There is stockpiling and hoarding going on from Bangladesh, right through Indonesia and the Philippines, as everyone is scared about food inflation,” said Sajjid Haider Pasha, director of Hong Kong-based grains trading and shipping agency Shunshing Group.
 

 


“But we are not sure for how long people can maintain such strong momentum on imports,” he said on the sidelines of the World Grains Trade Summit in Singapore on Wednesday.

Grains traders said the Philippines had secured one of its biggest soymeal import deals in years out of concern that grains prices – already their highest in more than two years – will keep rising.

Fear of wheat shortages in 2008 led to a scramble for supplies, leading to restrictions on rice exports by key suppliers and to a rally in the price of the Asian staple.

Many analysts play down the prospect of a repeat of the 2008 crisis, which also spurred high inflation and deep trade deficits as countries coped with rising import costs.

Still, world grain supplies have been tightening for months as droughts; floods and fast-growing demand have caused prices of wheat and corn to more than double from last summer’s lows.

Wheat, corn and soybean prices are at prices last seen in 2008, although below that year’s peaks. One key difference now is that rice is less than half of its 2008 peak.

Buyers are scouring the globe to tie-up food supplies for both population and livestock.

Bangladesh is paying up to import 200,000 tonnes of Thai parboiled rice in a government-to-government deal, sources said on Wednesday, part of a plan it announced last month to triple imports to boost stockpiles and supply security.

The price is $580 a tonne, over $50 a tonne more than it paid for parboiled rice from an Indian firm through a tender.

 

Bonanza for exporters
Australia provides a temporary solution for buyers looking to cap the cost of feeding livestock because floods have forced as much as half of its bumper wheat crop to be downgraded to animal feed.

One of those buyers could be Japan, which is considering plans to replace 1 million tonnes of its imports of corn this year with feed wheat and rice, Mitsutoshi Tada, chief grains trader for the National Federation of Agricultural Cooperative Associations in Japan, a leading importer, said on Wednesday.

Tada did not break down how much would be rice for human consumption and how much would be wheat feed for animals.

The Philippines has bought 200,000 tonnes of Australian feed wheat for shipment in April and June, traders at the Singapore summit said.

It also signed one of its largest soymeal import deals in years, buying 240,000 tonnes of the feed ingredient from South America last week for shipment between April and August, they said.

The world’s biggest wheat producer China has already bought up to 500,000 tonnes of Australia’s feed wheat, and may double that to a million tonnes this year, traders said this week.

A drought in China’s wheat-growing north has put the crop at risk, although the area under threat is shrinking following snow and efforts by farmers to improve irrigation.

China has wheat reserves to meet a year of consumption, but the drought has caught the attention of investors globally after the U.N. Food and Agriculture Organisation warned last week the drought was “potentially a serious problem.”

Australia is not the only country cashing in on abundance in a time of global shortage.

Pakistan last month resumed wheat exports for the first time in three years and has already sold 1 million tonnes to Bangladesh, Indonesia and Vietnam, traders said on Wednesday.

Action urged
The Group of 20 leading nations, whose finance leaders meet on Friday and Saturday in Paris, has promised to take action on rising food prices.

France – the revolving G20 president this year – is struggling to garner support for its plans for tough curbs on commodities speculation.

Indonesia said on Wednesday it would urge the G20 this weekend to put pressure on financial markets to clamp down on speculation on food prices.



Courtesy: The DAWN

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