According to the USDA global rice prices are falling in response to improved perceptions of rice supplies, although ‘the global supply and demand picture has not changed significantly’. Export restrictions however have had less of an impact on trade than expected as governments have still exported from state stocks and allow private contracts to be fulfilled on traditional markets. The situation is expected to further improve as pressure from private traders ‘lead governments to further relax current export policies’. According to the USDA analysis ‘the continued drop in oil prices, and the strengthening of the dollar are other factors that could further soften global [rice] prices’.
USDA, FAS FG 08-08, August 2008
http://www.fas.usda.gov/grain/circular/2008/08-08/grainfull08-08.pdf
The impact of perceptions on prices despite continuity in the underlying trends suggests an important role for speculative investments in recent surges in the rice price. The EC is currently undertaking an investigation of the role of investment funds and speculative deals in the overall commodity-price boom which has occurred in the past two years.