The price of rice, like many commodities, has collapsed in recent weeks. Prices for rough rice futures have declined about 25% since mid-April. Those who try to blame traders for the high price of food commodities tend to ignore the fact that very little rice is traded in futures. There are so many different varieties of rice that there are very few rice futures. How then can speculative traders be blamed for the price of rice?This chart is for rough rice traded on the CME, which is the most liquid rice futures contract in the world. It has open interest of only about 6,800 contracts for the July 08 contract. It is so thinly traded that I won't even touch it! Contrast that with an average of between 500,000 and 600,000 contracts of open interest for the July 08 corn contract. That's 100 times as much! And yet the price of corn has been dead flat for two months!
As can be easily seen in this daily chart, rice is in a downtrend! This is no mere correction, as with crude oil. This is a confirmed downtrend! Why doesn't the media report this fact? When was the last news media report that talked about the 25% decline in rice prices in the past 45 days?
