US rice sets new high on worries about supply

U.S. rice futures rose to an all-time high on Wednesday on worries about supply shortages that have triggered political unrest and export restrictions designed to protect dwindling domestic stocks.

But most other U.S. grain futures retreated, with wheat down 4 percent on prospects for a large global crop in 2008.

In the latest sign that fears of a rice shortage are rippling around the world, Sam's Club, the warehouse division of U.S. retailing giant Wal-Mart Stores Inc, said it was limiting sales of several types of rice.

Sam's Club is capping sales of the 20-pound (9 kg), bulk bags of rice to four bags per customer per visit.

The news came a day after Costco Wholesale Corp, the largest U.S. warehouse club operator, said it had seen increased demand for items like rice and flour as customers, worried about global food shortages, stock up.

"Everywhere you see (look), there is some story about food shortages and hoarding and tightness of supplies," said Neauman Coleman, an analyst and rice broker in Brinkley, Arkansas.

"Rice gets mentioned because rice is the No. 1 direct consumable agricultural grain in the world," he said.

On the Chicago Board of Trade, July rough rice futures hit a record high of $24.85 per hundredweight and settled at $24.82, up 62 cents or 2.5 percent.

Spot CBOT rice prices are up about 80 percent so far in 2008.

"Some of the main rice producing countries have imposed export curbs ... and this has combined with low global stocks to drive rice higher," said Kenji Kobayashi, a grains analyst at Kanetsu Asset Management in Tokyo.

"Rice has been hitting successive records. It's neared $25 and I think $30 is now on our horizon," Kobayashi said.

Trade bans have been put in place by India, the world's second-largest rice exporter in 2007, and Vietnam, the third-biggest, in hopes of cooling domestic prices of the staple food. Thailand is the largest exporter.

In the latest move, Brazil on Wednesday temporarily suspended rice exports, the agriculture ministry said.

The export curbs have been criticized by the Asian Development Bank, which said Asian governments were overreacting to surging food prices by resorting to market-distorting measures.

EU Trade Commissioner Peter Mandelson said the World Trade Organization should push food-producing countries to maintain exports to avoid a worsening of the food crisis.

"If we restrict trade, we're simply going to add food scarcity to the already large problems of food shortages that exist in different countries," Mandelson said in an interview.