Japan rice futures soar on nuclear fears

Japan started trading rice futures Monday but suspended the market after the price of the staple grain soared on fears that radioactive contamination from the Fukushima disaster will restrict supply. The nuclear plant, hit by the powerful March 11 quake and tsunami, has spewed radiation into the environment for nearly five months, tainting farm produce, including beef after cattle were fed radioactive rice straw. Consumer fears have grown that rice will be contaminated too and many families have stocked up on rice grown last year, while the government has ordered testing across the fallout zone. Japan on Monday started a two-year trial for futures trading in rice for the first time in more than seven decades at commodities exchanges in Tokyo and Osaka -- but the trade was quickly suspended when the price spiked. The Tokyo Grain Exchange and the Kansai Commodities Exchange began trading rice futures at 0000 GMT, with buy orders far exceeding sell orders, triggering a circuit breaker at the Tokyo market to prevent sharp price moves. No deals were made in Tokyo, while the Kansai market in the western city of Osaka saw the January 2012 contract trade shoot to 19,210 yen ($246.28) per 60 kilogrammes, much higher than the reference price of 13,700 yen. "In the wake of the nuclear accident, many people are expecting that the amount of rice to hit the market will fall this year," Nobuyuki Chino, who heads the Tokyo market's rice futures trading committee, told reporters. It might take "several days" for trading to become more stable, said Yoshiaki Watanabe, the president of the Tokyo exchange. Japan developed the world's first futures market, trading rice, during the early 1700s when the country was ruled by a samurai-led government. But the market was terminated in 1939 as Japan tightened its control over food distribution as it readied for World War II. Since then, farm lobbies have pressed against a resumption of rice future trading to avoid price volatility. The markets began their two-year trial in an effort to encourage investment, increase transparency in rice pricing and to open up the rice market.