'Like watering a desert': Experts doubt release of reserves will lower Japan rice prices.
Ideas:
Most agricultural products are sold at auctions, and as such most likely the farmers or coops will have to take the price as given in the auctions. So buy low and sell high for the wholesalers who buy the rice. But as this is maybe a Japanese government situation the Japanese government has already bought the price so, the price might be high or low depending on what the government wants.
Rice is a major stable in Japan and a cultural product so its kind of strange how this situation got out of control in the summer of 2024, and why didn't the government step-in immediately instead of just letting the market run its course, with low supplies and extreme prices in July and August and even now.
Yes, maybe flooding the market with the rice reserves from the Japanese government might not solve the problem as it takes time for prices to go down and momentum to gather in the market.
Most likely as most agricultural products are bought and sold in auction, as its the Japanese government selling the reserves, they might not want or expect high prices for the rice, which would be good news for the coops and wholesalers buying the government rice.
But that doesn't mean that when the rice hits the supermarkets and restaurants that the price is automatically going to be low or less than now, as the market will decide what the price might be as again supermarkets and restaurants will want to continue to keep the price high ensure they have can re-coop their losses as maybe Japanese consumers either stayed away from buying or stopped going to restaurants, due to the rice shortage and the high prices.
If the article is correct it seems the Japanese government has a lot of rice reserves, so why didn't they use the rice reserves back in July or August of 2024 to help the market and Japanese households, and especially as inflation was already high, as the Japanese government could have done a lot to lesson the stress on its citizens last summer.
While its good that the Japanese government is finally releasing the needed reserves, what about the wholesalers and the agricultural cooperatives and their motives related to how they are going to price the rice reserves. Are they going to keep the market price high or are they going to lower the price to help Japanese households and Japanese society.
Again, prices normally don't go down very fast as it might take some time before the Japanese consumers begins to see rice prices back to pre-August 2024 if at all, as again the supermarkets and restaurants might keep the prices high for the immediate future, until the actual rice supply in Japan gets back to normal.
Markets are emotional and the rice market is no different. And yes, they are moved by supply and demand but more importantly they are moved my momentum and emotional considerations. For example, as there was/is a rice shortage in July and August of 2024, there was a so-called rice shortage during that time.
As a result supermarkets, stores and restaurants began to increase the price of rice. As other supermarkets and restaurants began to feel the rice shortage and news spread quickly of possible rice shortage all supermarkets and restaurants began to increase their prices.
And at the same time, there were potential earthquake warnings, which scared many Japanese households and consumers began to rush the supermarkets to horde the rice there and supermarkets actually had to impose a limit on the number of bags of rice a consumer could buy as the rice shortage combined with the earthquake scare had Japanese consumers rushing to the supermarkets to get what rice they could.
So again, the price of rice might not go back to any kind of normal for a while as the rice market has to adjust to the new reserves and increase in the supply. And again, the market might not follow traditional market principles of supply and demand as again markets sometimes can be very irrational.
Yes, unfortunately not all in the market are rational as some farmers and suppliers will hold supplies and wait until the price is high enough for their liking as farmers and suppliers have to take the price as given in auctions and if they know the auction price is going to be low, they might not want to participate in the auction, instead waiting for higher prices auctions.
Its unfair to the Japanese consumer or supermarkets or restaurants, but the farmers and suppliers do have some power in the marketplace as to when they want to sell their products, as again they are price-takers, meaning at an auction they have to take the prices as given, and if they know at an auction the price is going to be too low for them or their liking they will not participate in the auction.
Its seem there might be some power struggles going on between the Japanese government and rice suppliers as maybe rice suppliers feel they can hold out until the Japanese government repurchases the rice suppliers rice at a higher price.
Of course, that is not good for Japanese society or Japanese households but maybe the rice suppliers are thinking about their self-interest and their survival in the rice market.
Also, as Japan is an ageing society, and many of the rice farmers might be somewhat old and they are thinking about their future and also about what could happen to the rice market down the road.
Would it be better for the Japanese government to flood the market with more than 210,00 tons of rice and then let the market decide the price instead of releasing small amounts of rice at at time, which might not have any significant effect on rice prices.
It seems normal supply and demand principles are not working in the Japanese rice markets, as increases supply should reduce prices but they really haven't at this time.
And again, it takes time for the market to react and adjust to any significant changes in the market.
Have a nice day!
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.