News

Could rice prices rise?

August 23, 2010

Frbiz.com, one of China's leading B2B search platforms, has reported a rise in China's wholesale food prices. The news is troubling for the foodservice industry, as China is the world's largest exporter of rice.

Currently, at Beijing's biggest wholesale market, rice, flour, grains, etc. are experiencing a steady rise in prices. Rice in particular has seen a 10.82 percent increase in price through 2010.

Throughout August, prices in China's rice market have continually risen. The average wholesale price of the northeast rice at early August was 4 RMB per kilogram. It is now at 4.1 RMB/kg -- an increase of 0.1 RMB. For grain, there has been a 10 cent per/kg rise in price -- a significant increase.

Wholesale market data shows that northeast rice has increased 0.6 RMB per kilogram since last year. The increase has reached 18.6 percent. While compared with the same period of 2008, there has been a 1.01 RMB increase per kilogram.

The rise in price is mainly due to market demand amplification, severe weather and an increase in transportation costs.

Data shows that in the past three years, northeast rice prices have increased far beyond the usual speed. A major cause of this speedy increase is a state induced increase in minimum purchase price levels on rice in China.

Entering August, flour sales have increased mainly due to a period of strong wheat production, and wholesale flour prices are already rising.

In recent years, flour prices have been higher, mainly due to the national standard of minimum prices for wheat increasing year by year. Coming cool weather coupled with flour entering its peak consumption season of the Mid-Autumn festival and Chinese National Day Holiday should keep flour prices high for the time being.