Trade in rice futures back, halts from get-go


No quotation was given for rice futures contracts on the Tokyo Grain Exchange on Monday when Japan restarted rice futures trading for the first time in 72 years, as the bourse was forced to halt trading amid massive buy orders triggered by fears of tighter supply.

The bourse was forced to impose a “circuit breaker” trading-suspension mechanism for the contracts for the Koshihikari rice brand from the Kanto region surrounding Tokyo after they came under a barrage of buy orders placed at bids exceeding the ¥600 maximum allowable margin for a one-day price rise.

The orders were triggered by speculation that prices will soar as a result of a tighter supply stemming from the March 11 earthquake and tsunami, radiation leaks at the Fukushima No. 1 nuclear plant, and July’s deluge of rain in the prefectures of Niigata, Fukushima and other rice-producing regions.

On the Kansai Commodities Exchange, meanwhile, where different trading-suspension rules are followed, a Koshihikari brand from the Hokuriku region for delivery in January exchanged hands at ¥19,210 per 60-kg bag at 9 a.m.

The government approved the rice contracts in July, allowing trading on the two bourses for the first time in 72 years, for a two-year trial.

Rice futures were traded in Osaka for some 200 years until 1939, when wartime economic controls started.

The bourses held ceremonies to mark the resumption of the futures trading Monday morning.

“Rice futures will be able to play an important role in presenting yardsticks on fair prices, while acting as a hedging tool,” Tokyo Grain Exchange chief Yoshiaki Watanabe said.

Kansai Commodities Exchange chief Yasuaki Okamoto said, “We have finally come to realize our long-cherished wish to resume rice futures.”

The rice futures are designed to provide benchmark rice prices through more extensive trading in the free market, and to allow farmers and distributors to avoid future price fluctuation risks.