BANGKOK (Reuters) - Fresh demand for rice in two big Asian countries is sending a worrying signal the region's main staple may join a surge in prices for other grains, worsening Asia's spiralling food inflation.
Asian rice traders say aggressive buying in heavily populated Indonesia and Bangladesh could spread, pushing up world rice prices even though bumper crops in Thailand and Vietnam should mean ample supplies.
"This is only the start of the panic buying," said Ker Chung Yang, commodities analyst at Singapore-based Phillip Futures, referring to Bangladesh's recent tripling of its rice import target and Indonesia's purchase this week of 820,000 tonnes of Thai rice, nearly five times the volume initially sought.
"I expect we'll have more countries coming in and buying grain."
Still, analysts see little risk of a 2008-like food crisis, when rice prices rose above $1,000 (630 pounds) a tonne, double their current level.
Vietnam's rising supply and lower imports from the Philippines, the world's top importer last year, could mean rice continues to defy a broader trend of fast-rising global prices for wheat, soybeans and other foods.
Thailand's benchmark 100 percent B grade white rice was offered at $540 per tonne on Friday, unchanged so far this year after falling 13 percent last year. In comparison U.S. wheat and corn futures have risen by more than half since the start of last year.
A sustained rise in the price of rice, a staple in the diets of nearly half the world's population, would squeeze the budgets of millions of Asians living near the poverty line, raising the risk of unrest in a reprise of the 2008 food security crisis.
The aggressive purchase by Indonesia, a country of 230 million people, seems aimed more at bringing down 20-month high inflation, a view reinforced after the country followed up on Friday by scrapping import duties on rice, soybeans and wheat.
"The Indonesian buying is a classic example of countries doubling their imports of rice in a very short span of time," said one Singapore-based trading manager with an international trading company.
"The way Indonesia has bought smells of food security fears rather than genuine demand."
Indonesia bought 820,000 tonnes of Thai rice, more than four times the 170,000 tonnes it initially tendered for.
In Bangladesh, an impoverished country of 150 million people and South Asia's biggest rice buyer, traders reported panic buying and hoarding following a 50 percent rise in local rice prices over the past year.
This month it tripled its import target to 900,000 tonnes for the year to June 30 to cool prices.
"There is panic buying among consumers and a sense of insecurity as millers and middlemen hold back rice expecting better profits," said Badrul Hasan, director for procurement at the Directorate General of Food, the state grain buyer.
World leaders meeting in Davos said on Thursday that soaring food prices risked stoking more unrest and even war, but top executives there rejected calls for curbs on commodity speculation.
The U.N. food agency has said food prices hit a record high in December, surpassing levels in 2008 that sparked riots. But while weather shocks are disrupting supplies, there has been no repeat of the leap in energy and fertiliser prices or of the widespread hoarding of three years ago.
Most experts doubt Asia is on track for a spike in rice prices of the magnitude of 2008 when governments made desperate attempts to secure supplies amid widespread unrest.
"It is not the baseline scenario but it is one of the risk scenarios that we face," said Leif Eskesen, chief economist for India and Southeast Asia at HSBC.
He said, however, there was a chance of sustained higher food prices, including for rice, because of a resurgence of demand in developing regions such as Southeast Asia, where ultra-low interest rates have caused millions to splash out in department stores and spend more on food.
"Some of these food prices are remaining elevated and part of that is because demand has been quite strong," said Eskesen.
"The broader message is even if they stay elevated for two to four months, they can start to spill over to inflation expectations. And that is really the main concern as we see it here, that that is starting to happen," he said.
U.S. wheat futures touched a 29-month high on Thursday as buyers scrambled for supplies amid harsh weather in major producing countries like Australia and Russia.
Whether rice follows other food prices higher is no sure bet.
Vietnam, the world's second-largest exporter after Thailand, was forecast to enjoy a bumper next crop, while the Philippines, the top buyer, has said it would halve imports in 2011.
But traders said food security fears could trump fundamentals. Thailand expects rice prices to steadily rise, said Korbsook Iamsuree, the head of the Thai Rice Exporters Association
"Food prices have gone up but rice hasn't really gone up substantially, but that is the trend," she told Reuters. "We expect rice prices to go up this year."
With elections in Nigeria, usually the world's second-largest rice importer, there could be some urgency to stock up on rice to ensure stable food prices.
"Factors are pointing towards the possibility of a rally in rice prices," said another Singapore-based commodity trader.
"It will not be due to supply constraints but it will essentially be food security fears and the general food complex moving up." (Additional reporting by Naveen Thukral in SINGAPORE, Paul Ruma in DHAKA, Ho Binh Minh in HANOI and Ambika Ahuja in BANGKOK; Editing by Alan Raybould and Michael Urquhart)