Asia rice panic should subside as farmers rush crops

By Sambit Mohanty

SINGAPORE (Reuters) - A global rush for rice that has heightened food security anxiety across Asia should slow in coming months, as consumer nations replenish lowly stocks, extra crops boost supplies and a sense of panic subsides.

Rice output is set to rise this year as major producers plant additional crops, likely slowing or halting a rally that has caused prices to more than double since January and added a new element of political risk to policymakers' inflation headache caused by the surge in global food prices.

Even before those fresh crops hit the market rice analysts and traders expect the frenzy of recent purchases to ebb as importers grow more confident on future supplies.

"Governments are desperate to build supplies before things worsen. They are now better positioned. This increases the likelihood that a crisis can be averted," Abah Ofon, a soft commodities analyst at Standard Chartered Bank, told Reuters.

The growing unease over rice supplies reached fever pitch in recent weeks as surging food inflation prompts some of the world's top suppliers to curb exports, hoping to tame prices at home -- while goading them higher abroad.

Benchmark Thai 100 percent parboiled rice soared from $500 a tonne in late February to a record of nearly $925 a tonne this week, even though prices normally start coming off as harvests peak from April to July.

There's a good argument for higher prices. Global stocks have fallen by half since their early 1980s peak as demand expanded faster than production, but benchmark prices had hovered around $400 a tonne or lower since the start of this decade.

Other grain prices have also doubled or more as competition for cropland intensifies, demand from increasingly wealthy emerging economies grows and biofuels suck up supplies.