Following a period of rather benign price drift, rice prices have a rocket under them for the last two days.

The rice market has a mechanism called “limit up” which constrains any daily price rise to a maximum of $0.50 per hundred pound trading unit and that limit has now been met in both of the last two days :

After for most of the day, grains traders were pretending they have no interest in gobbling up every available pound of rice, the end of trading was like an Ebay auction where everybody submitted their bid in the last possible instant, sending rice from $15.60 to $15.99 in seconds. And since Rice previously closed at $15.51, we were literally two cents away from a second limit up day in the world’s most popular food. Since we speculated that rice is the next commodity bubble on Monday morning, the grain has surged nearly 7%. Incidentally, this is the highest price for rice in the last twelve month period. Lastly, if Hoenig is indeed telegraphing QE3 as we suspect, look for rice to double six months from now.

Current prices are now breaking through last Octobers highs as can be seen on the chart from yesterday (via ZeroHedge – add another $0.50 for todays action taking the current price to $16.00).

At this point, you may be wondering why rice prices are important.

Well, the following table should give a small but vital clue as to the pain that these high prices will cause (measure is consumption per million people) :

A large number of small but populous countries top the list of rice consumers but not far down the list at number 7 is China.

If any, that is the one to watch if this rice price inflation continues because one fifth of the worlds population live there and rioting on that scale would make Egypt look like a bit of minor hair pulling in an infants school playground.

That is assuming that Africa doesn’t implode first following the very latest from Ivory Coast :

Ivory Coast Defaults On $2.3 Billion In Bonds

Another confirmation of just how insane everything is comes from West Africa. The London Club announces that the Ivory Coast is now in default after the January 31, 30 day grace period expires, and bonds jump.

That should make chocolate unaffordable to all but the richest types such as our very own Mervyn King who was only telling us a few days ago that being poor was good for us while receiving an eye watering £1.4 million pension plan top up.

Bastard.