Wal-Mart Rations Rice, this is out of control...

What I don't understand with Rice craze is the fact that the world rice prices seems indexed on Chicago' Rough Rice which trades about 1000-2000 contracts per day on the front month...

Please tell me that the 5 guys trading 10 lots on this market have no influence on world rice prices and thus famines in Africa and that this bull market has external causes ...
 
my neighbor Ramesh and Sangeeta are going ape-shit without their basmati. Its only 4 rupees for a 50lb bag in bangalore. ( that's 10 U.S. cents).
 
Quote from RhinoGG:

my neighbor Ramesh and Sangeeta are going ape-shit without their basmati. Its only 4 rupees for a 50lb bag in bangalore. ( that's 10 U.S. cents).
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that is only possible with a substantial subsidy from the indian government.
how is the subsidy calculated?
 
What I don't understand with Rice craze is the fact that the world rice prices seems indexed on Chicago' Rough Rice which trades about 1000-2000 contracts per day on the front month...

Please tell me that the 5 guys trading 10 lots on this market have no influence on world rice prices and thus famines in Africa and that this bull market has external causes ....
More...



The Rice market is predominantly cash, not a futures one. When you trade the physical rice, what you are looking for is the basis spread (the spread between cash vs future price).

The spread has been widening for sometime, That has been putting a lot of pressure on producers. with that basis divergence, multinational grain companies will not buy grain more than 60 days out, That has put farmers in financial trouble, unable to project sales income for the upcoming harvest or prepay input costs. with futures and cash not converging anyway, and banks drained of extra funds to finance positions of farmers or grain elevators, there's no incentives to hedge.

On The other hand, According to a United States Department of Agriculture (USDA) report, the world's milled rice stocks in 2007-08 totalled 77.19 million tonnes against total demand of 451 million tonnes and Vietnam has maintained rice stocks at only 1.09 million tonnes of milled rice against demand of up to 23.72 million tonnes. Asia is the world largest producer and consumer of rice.

The USD has been a critical factor in this ecuation.
 
Quote from rubibond007:

The Rice market is predominantly cash
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Thanks a lot for the clarification... I was quite sure RR was not of great influence, given the quantity of rice traded.
 
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