The price of rice has increased dramatically in recent weeks due to crop failure overseas and resulting hoarding, NBC11 reported.

And at least one Bay Area store is asking customers to hold back on their rice purchases. Costco has posted signs asking customers to follow their regular rice-buying habits.

The rice price increase is a result of a domino effect, NBC11’s Noelle Walker reported. Drought in Australia led to a severe decline in rice production that in turn led the world’s largest rice exporters to restrict exports. That spurred higher rice prices and hoarding in Asian countries, NBC11 reported.

Now in the United States, rice prices have skyrocketed.

Son Tran owns Le Cheval Vietnamese Restaurant in Oakland.

He said he’s seen the price of rice go from $20 to $40 in a matter of weeks.

And Le Cheval’s stockpiles are dwindling.

Add to that, the price of vegetables has gone up 50 percent, and some of Tran’s regular customers aren’t so regular anymore.

The empty tables are a new and troubling trend.

Rice isn’t the only food in short supply. The unleavened bread snack matzo, popular with Jewish families during Passover, is also hard to find.

Grocers underestimated demand for the product and one of the main producers of matzo crackers had a problem with one of its ovens on the East Coast, which also shortened supplies.

Bay Area Shoppers Asked To Limit Rice Purchases - News Story - KNTV | San Francisco

Farmers and food executives appealed fruitlessly to federal officials yesterday for regulatory steps to limit speculative buying that is helping to drive food prices higher. Meanwhile, some Americans are stocking up on staples such as rice, flour and oil in anticipation of high prices and shortages spreading from overseas

Their pleas did not find a sympathetic audience at the Commodity Futures Trading Commission (CFTC), where regulators said high prices are mostly the result of soaring world demand for grains combined with high fuel prices and drought-induced shortages in many countries.

The regulatory clash came amid evidence that a rash of headlines in recent weeks about food riots around the world has prompted some in the United States to stock up on staples.

Costco and other grocery stores in California reported a run on rice, which has forced them to set limits on how many sacks of rice each customer can buy. Filipinos in Canada are scooping up all the rice they can find and shipping it to relatives in the Philippines, which is suffering a severe shortage that is leaving many people hungry.

While farmers here and abroad generally are benefiting from the high prices, even they have been burned by a tidal wave of investors and speculators pouring into the futures markets for corn, wheat, rice and other commodities and who are driving up prices in a way that makes it difficult for farmers to run their businesses.

“Something is wrong,” said National Farmers Union President Tom Buis, adding that the CFTC’s refusal to rein in speculators will force farmers and consumers to take their case to Congress.

“It may warrant congressional intervention,” he said. “The public is all too aware of the recent credit crisis on Wall Street. We don’t want a lack of oversight and regulation to lead to a similar crisis in rural America.”

Food economists testifying at a daylong hearing of the commission said the doubling of rice and wheat prices in the past year is a result of strong income growth in China, India and other Asian countries, where people entering the middle class are buying more food and eating more meat. Farm animals consume a substantial share of the world’s grain.

U.S. wheat stocks are at the lowest levels in 60 years because worldwide consumption of wheat has exceeded production in six of the past eight years, said U.S. Agriculture Department chief economist Gerald Bange. Adding to tight supplies was the back-to-back failure of two years of wheat crops caused by drought in Australia, a major wheat exporter, he said.

In addition, the diversion of one-third of the U.S. corn crop into making ethanol for vehicles has increased prices for corn and other staples such as soybeans and cotton as more acreage is set aside for ethanol production.

Farmers also have raised prices because they have been hard hit by spiraling energy costs, which not only raised the price of diesel fuel to records of over $4 a gallon but drove up the cost of nitrogen fertilizer, which is made from natural gas.

“Commodity prices across the board are at levels not experienced in many of our lifetimes,” said CFTC Chairman Walter Lukken. “These price levels, along with record energy costs, have put a strain on consumers as well as many producers and commercial participants that utilize the futures markets to manage risks.”

The upswing in prices has been exaggerated by the massive influx of investors and speculators seeking to profit from rising prices for corn, wheat, oil, gold and other commodities. Big Wall Street firms and hedge funds have taken huge positions in futures markets that once were dominated by relatively small operators such as farmers and grain-elevator owners.

Small investors, who see fast-rising commodities as good hedges against inflation and a falling dollar, also are getting a piece of the action by investing in index funds that are tied to commodity prices.

“During such turbulent times, it is tempting to shoot first and ask questions later,” Mr. Lukken said, but he contended the commission should be “cautious” about doing anything to curb speculation. He and other regulators argued that speculators add volume and liquidity to the markets, which makes them operate more efficiently and helps farmers and other players.

Commissioner Michael V. Dunn said the soaring demand for food and fuel worldwide might be leading to permanently higher food prices, both domestically and abroad.

“We may already be working under or fast approaching a new paradigm of higher agricultural prices,” he said. “There is not a silver bullet or single solution to address the problems we are currently facing.”

FARM TRADE

Federal market regulators say the soaring price of most commodities over the past year reflects increased demand rather than investor speculation.

Rice 122%

Wheat* 95

Soybeans 83

Crude oil 82

Corn 66

Gasoline 41

Gold 37

Sugar 30

Coffee 24

Milk 5

Live cattle -7

Lumber -14

* On the Chicago Board of Trade

Source: Commodity Futures Trading Commission

http://www.washingtontimes.com/apps/pbcs.dll/article?AID=/20080423/BUSINESS/868303815/1001

Sam’s Club, the No. 2 U.S. warehouse club operator, said it is limiting sales of Jasmine, Basmati and long grain white rice “due to recent supply and demand trends.”

U.S. rice futures hitting an all-time high Wednesday on worries about supply shortages.

On Tuesday, Costco Wholesale Corp, the largest U.S. warehouse club operator, said it has seen increased demand for items like rice and flour as customers, worried about global food shortages and rising prices, stock up.

Sam’s Club, the No. 2 U.S. warehouse club operator, is limiting sales of the 20-pound (9 kg), bulk bags of rice to four bags per customer per visit, and is working with suppliers to ensure the products remain in stock.

Warehouse clubs cater to individual shoppers as well as small businesses and restaurant owners looking to buy cheaper, bulk goods.

With prices for basic food items surging, customers have been going to the clubs to try to save money on bulk sizes of everything from pasta to cooking oil and rice. 

Sam’s Club said the large-sized bags of rice subject to the limits are typically purchased by its restaurant owner or food service customers.

Sam’s Club said is not limiting sales of flour or cooking oil at this time. Costco said some of its stores have put limits on sales of items such as rice and flour, but it was trying to modify those restrictions to meet customer demand.

Costco Chief Executive James Sinegal told Reuters that he believed the recent surge in demand was being driven by media reports about rising global demand and shortages of basic food items in some countries.

Food costs have soared worldwide, spurred by increased demand in emerging markets like China and India; competition with biofuels; high oil prices and market speculation.

The situation has sparked food riots in several African countries, Indonesia, and Haiti. United Nations Secretary-General Ban Ki-moon has warned that higher food prices could hurt global growth and security.

Rice prices have risen 68 percent since the start of 2008.

Trade bans on rice have been put in place by India, the world’s second largest exporter in 2007, and Vietnam, the third biggest, in hopes of cooling domestic prices. Rice is a staple in most of Asia.

On Tuesday, Tim Johnson, president-CEO of California Rice Commission, which represents growers and millers of rice in the state, said: “Bottom line, there is no rice shortage in the United States. We have supplies.”

Wal-Mart shares were up 0.4 percent to $56.80 in afternoon trading, while Costco shares rose 1.7 percent to $69.26. (Reporting by Nicole Maestri, editing by Jeffrey Benkoe and Tim Dobbyn)

Wal-Mart’s Sam’s Club limits rice purchases