On Wednesday, the Thai Rice Exporters Association revealed that the price of Thai white rice 5% broken, a key Asian benchmark, reached a new 15-year high. This surge is mainly attributed to increasing fears of a global shortage due to the damaging effects of the El Nino weather phenomenon on Asian farmlands and India's recent decision to restrict certain rice exports.
Thai white rice 5% broken hit $659 a ton, the highest level since October 2008. Prices of the staple food that feeds billions of people worldwide are up over 50% since the start of 2022.
Chief Asia Economist at HSBC Global Research, Frederic Neumann, recently told clients that skyrocketing rice prices present hurdles for central banks combating high inflation. He drew parallels between the current surge in food prices and the one that rocked the world in 2008, noting that shortage fears are rising for the staple food that feeds billions of people.
"The memory of the 2008 Asian food price scare sits deep," Neumann wrote.
He said, "Back then, rising rice prices in some economies quickly spilled over into other markets as consumers and governments across the region scrambled to secure supplies. It also lifted the prices of other staples, such as wheat, as buyers shifted to alternatives."
Last month, Sara Menker, founder and CEO of Gro Intelligence, told Bloomberg TV on the sidelines of a conference in Singapore that the current food crisis surpassed the one in 2007-08, which ultimately sparked the Arab Spring across the Middle East a few years later.
Menker said elevated crop prices and steep declines in local currencies against the dollar have severely pressured households of emerging market economies.
And remember, SocGen's Albert Edwards warned in late 2020 that central banks' money printing during Covid would spark a rise in food prices and the usual social-economic instabilities.
