Thailand floods may cut global rice export glut

Thailand's worst floods in more than a half century may have wiped out as much as 14% of paddy fields in the world's biggest rice exporter, potentially erasing the predicted global glut. The Thai export price, a global benchmark, may climb 20% to $750 a tonne by December, according to Sumeth Laomoraphorn , president of CP Intertrade Co, the country's largest seller of packaged rice. Tropical storms inundated 62 of 77 provinces, destroying 1.4 million hectares and as much as 7 million tonne of crops, the government says.

That equals 4.6 million tonne of milled grain, 1 million more than the surplus expected by the US Department of Agriculture. Rice, a staple for half the world, was already this year's best-performing agricultural commodity after drought cut the US harvest to the lowest level in 13 years. Prices also rose as Thailand started buying at abovemarket costs to boost farmer incomes. That is adding renewed pressure to global food prices monitored by the UN, which had dropped 5% from a record in February as other grains declined.

"I've never seen such a catastrophe, watching the field turning into a sea of floodwater," said Wichian Phuanglamchiak, a 74-year-old farmer in the central province of Ayutthaya, speaking from the second floor of his house. "My entire crop was wiped out and I have to wait for the water to recede before I can replant in December." Thailand's export price jumped 13% to $625 a tonne this year as wheat tumbled 19% in Chicago and soyabeans fell 12%.

The Standard & Poor's GSCI Agriculture gauge of eight commodities retreated 11%, while the MSCI All-Country World Index of equities dropped 8%. Treasuries returned 8.1%, Bank of America indexes show. Rice on the Chicago Board of Trade jumped 13% since October 10. The main Thai harvest, which represents about 70% of annual output, was expected to expand 3.3% to a record 25.1 million tonne before the floods, government estimates show. The disaster began in the north in July and has now spread across 81% of provinces.