Rice prices surged to a fresh 34-year high on Tuesday as the Philippines awarded a tender for the staple at an average price of $708 a tonne, up almost 50 per cent from the price it paid in late January.
The sharp rise reflects a market suffering from tightening supply after key producers India and Vietnam this month both imposed further restrictions on rice exports. Supplies from Thailand are also low, traders said.
The jump in rice prices would exacerbate rising inflation in Asia and risks triggering social unrest, analysts said. The Philippines, one of the world's biggest rice importers, is particularly exposed.
European brokers quoted an indicative price for high quality Thai rice, a global benchmark, of about $640 a tonne, up from $515 in late February. In the last three months, the price has surged about 72 per cent.
Rice is now trading at the highest level since mid-1974 when prices surged in the midst of the first oil shock. Alex Waugh, director of the UK Rice Association, the industry body, said: "In this market, the priority for European millers is to secure supplies of rice to meet their longer term commitments."
Ben Savage, managing director at Jackson Son & Co, the London-based rice broker, said that prices have also been boosted by poor weather in southeast Asia, where the grain is a staple for about 2.5bn people.
"It has been surprisingly cool both in Vietnam and Thailand and that has delayed the crop and reduced yields," Mr Savage said.
He said that price should become a bit more stable in the comings weeks as more supplies are delivered to the market, but added: "We do not expect to see prices much lower in the short term, nor a return in 2008 to last year's levels."
Thai rice prices last year averaged $334 a tonne, according to the UN's Food and Agriculture Organisation.
Vietnamese traders quoted a price of $610 a tonne for the country's high quality rice, up from $550 last week and $355 in December. The rise in Vietnam's prices comes as the country this week halted signing new contracts for exports until May, extending a previous curb intended to keep its domestic market well supplied.
India has also further restricted foreign sales of rice raising the minimum export price for non-basmati rice to $650 a tonne, up from $500 a tonne. The measure has, de facto, closed the export market, industry executives said.
Vijay Sethia, president of the All India Rice Exporters' Association said the step was aimed to restrict the outflow of rice from the country.