Before You Really Need To

Rice paddy near Sacramento (bizjournals.com)

Barron's: rice prices may spike this year. The reasons are current low prices that discourage planting and bad weather [bold added].

Prices have been on an almost continuous slide for the past 17 months, discouraging growers even as demand increases. Rice is trading around $10 per hundred pounds, down nearly 40% from the end of 2013.

“Current levels of supply against demand are very similar” to the food crises of 1972-74 and 2006-08, says Shawn Hackett in a recent edition of the Hackett Money Flow Report.

The stocks-to-trade ratio, a measure of how much rice is in storage relative to how much is shipped around the globe, is 225%, a tad lower than the 233% seen in 2007-08 when prices started to surge, according to the Firstgrain Rice Market Strategist newsletter. The lower ratio means smaller stockpiles. [snip]

Hackett sees unusual weather harming crops. Specifically, he pinpoints a “super” El Niño weather system in the Pacific Ocean as a potential problem....El Niño tends to cause droughts in the summer and floods in the fall from typhoons in all three countries, which produce about a third of the world’s rice.

You may not speculate in commodities, dear reader, but do yourself a favor and pick up that 25- or 50-pound bag of rice before you really need to (white keeps 4-5 years, brown lasts 6-8 months).