1.5 Million Tons of Unwanted American Rice In Japan Sends Rice Price Downwards

Remember a few weeks back, when rice prices were rising to phenomenal levels and box stores stateside were rationing rice ahead of what the Wall Street Journal and many others were predicting would be an exponential further increase in price and mass shortages? Well it turns out that all was not as it appeared. For example, a “quirk” in WTO rules essentially forces Japan into buying American rice they don’t need, which has created a 1.5 million ton surplus of high quality American rice. While third world countries were rioting, Japanese pigs were eating their fill. But the unlocking of this surplus is now sending rice prices downwards, where they will probably stay for some time:

Rice prices nosedived today as Japan moved closer to unlocking its massive hidden surplus and bullish supply forecasts routed speculators.

The price collapse came as commodity experts called on Japan and the US to urgently unwind one of the biggest “invisible” distortions in global rice markets: a quirk of World Trade Organisation rules that obliges Tokyo to buy grain it does not need and effectively turns millions of tons of high-grade American rice into feed for Japanese pigs.

If that distortion were removed, said researchers at the Washington-based Centre for Global Development (CGD), and the 1.5 million tons of unwanted US rice were released from Japan’s storage silos, the crisis that has sent the price of the crop that feeds half the world would be instantly solved. Rice prices, suggested the group’s forecasts, could even halve between now and June.

Maybe the world’s not ending after all.

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