The Rice Oracle's Wild Prediction That Actually Came True

In 2007, a 65-year-old Thai rice exporter stood up and told everyone that rice prices would go from $300 per ton to $1,000. People laughed at him. Not politely. They actually laughed. Chapter 30 of Torsten Dennin’s “From Tulips to Bitcoins” tells what happened next. Spoiler: nobody was laughing by spring 2008.

The Rice Oracle

His name was Vichai Sriprasert. He was the honorary chairman of the Thai Association of Rice Traders and one of Thailand’s largest rice exporters. People called him the “Rice Oracle.” At 65, the man had spent his entire career watching rice markets. He knew rice the way some people know their own heartbeat.

Thailand was the world’s largest rice exporter at the time. So when Thailand’s most connected rice trader made a bold prediction, people should have listened. Instead they treated it like a joke. Triple the price? Sure, old man.

Then rice broke $1,000 per ton in spring 2008. Vichai was right. Everyone else was wrong.

Why Rice Is Different

Here is something most people do not think about. The world produces around 650 million tons of rice every year. That puts it right up there with corn and wheat as the most cultivated cereal on the planet. The biggest producers are China, India, Indonesia, Bangladesh, Vietnam, and Thailand.

But here is the thing that makes rice special and dangerous. Out of that 650 million tons, only about 30 million tons get traded internationally. That is less than 5%. Most rice gets eaten in the same country where it was grown.

That tiny trading volume means even a small disruption to supply or demand sends prices flying. It is like a market with almost no cushion. One bad harvest, one export ban, one panic buying spree, and the whole thing tips over.

Rice also needs a ridiculous amount of water. We are talking 3,000 to 5,000 liters per kilogram for wet cultivation. That means drought is not just bad for rice. It is fatal.

Agflation: When Food Prices Go Crazy

The rice spike did not happen in isolation. Starting in 2007, food prices across the board went haywire. Someone even invented a word for it: “agflation.” Agricultural inflation.

The FAO food price index rose 57% in a single year, from March 2007 to March 2008. Wheat and soybean prices doubled. Corn went up 66% since autumn 2007. Everything edible was getting more expensive, fast.

Rice followed the trend but somehow managed to be even worse. From June 2007 to April 2008, global rice prices rose 75%. In Asia the increase was steeper. Prices went from around $400 per ton to over $1,000. Vichai’s prediction was not just correct. It was conservative.

Three Billion People Depend on This

Here is where the numbers stop being abstract. Rice is the staple food for three billion people. In many developing countries, half of household income goes to food. When food prices double, these families do not just tighten their belts. They stop eating.

The consequences were immediate and violent. Protests broke out in Haiti, and people were killed. Uprisings erupted in Egypt, Burkina Faso, Cameroon, Indonesia, and other countries. This was not about stock portfolios or trading losses. This was about families unable to afford the one food that kept them alive.

The Perfect Storm

So what actually drove rice from $300 to $1,000? It was not one thing. It was everything hitting at once.

Urbanization eating farmland. Rapid urbanization across Asia was destroying agricultural land. Cities were growing on top of what used to be rice paddies. Less land means less rice.

More meat, more grain. China’s meat consumption had increased 150% over thirty years. More meat means more grain fed to livestock instead of people. The math does not work out.

Weather disasters. Storms and floods destroyed 20 million hectares of farmland in a single year. That is twice Thailand’s entire agricultural acreage. Bangladesh lost almost its entire rice crop to floods and Tropical Storm Sidr. Vietnam got hit by pest infestations and crop disease.

Export bans. This is where the panic set in. Vietnam and India restricted rice exports. China waived rice exports entirely. When the biggest producers start hoarding, everyone else panics too.

Hoarding at every level. In Thailand, it was not just the government. Farmers, traders, and rice mills all held onto their stocks. Why sell today when the price will be higher tomorrow? Rational for each individual. Catastrophic for the market.

Even Wal-Mart rationed rice. In the United States. The richest country on the planet. Wal-Mart put limits on how much rice customers could buy. That is when you know things have gone sideways.

The Philippines Panics, Cyclone Nargis Hits

The Philippines was the world’s largest rice importer. When prices started spiking and exporters started banning, the Philippines announced massive purchases. This was desperation buying that pushed prices even higher.

Then on May 3, 2008, Cyclone Nargis slammed into Myanmar. This was one of the deadliest natural disasters in recorded history. Between 50,000 and 100,000 people died. The cyclone devastated Myanmar’s rice-growing region right during harvest season. More supply destroyed at the worst possible moment.

By this point, rice prices had quadrupled from where they started. Vichai’s $1,000 prediction had come and gone.

How It Ended

Like most commodity panics, it ended when the panic stopped.

In May 2008, Pakistan loosened its export restrictions. India’s crop came in 2 million tons larger than expected. The grip of fear started to loosen. Prices came back down. The crisis passed, at least in terms of market prices.

But the damage from those months of insanity was already done. The riots had already happened. The people who could not afford rice had already gone hungry.

What Stays With Me

This chapter connects to the wheat story from Chapter 27 in a brutal way. Australia’s drought tripled wheat prices. Rice quadrupled. Same pattern: concentrated supply, thin trading volumes, natural disasters, and then human panic making everything ten times worse.

But rice is more personal than wheat for a huge part of the world. Three billion people. Half their income on food. When you read about commodity price spikes in a textbook, they feel like numbers on a chart. When you realize those numbers translate directly into whether families eat tonight, the chart looks very different.

What gets me about this story is the hoarding spiral. Vietnam bans exports, so India bans exports, so China bans exports, so Thailand hoards, so the Philippines panic-buys. Each decision is rational on its own. Together they create a catastrophe. It is the prisoner’s dilemma playing out in real time with actual starvation as the outcome.

And then there is Vichai. The man knew his market. He saw the supply tightening. He saw the demand growing. He did the math that nobody else wanted to do and came up with $1,000. People laughed because the number sounded crazy. But he was not guessing. He was reading the signals that everyone else was ignoring.

The lesson from the Rice Oracle is one that shows up again and again in this book: when someone who has spent decades in a market tells you something uncomfortable, maybe do not laugh. Maybe listen.

Previous: When South Africa’s Lights Went Out and Platinum Went Crazy

Next up: The Memphis Wheat Trader Who Tried to Fool the Market

This is part of my From Tulips to Bitcoins book retelling series. New posts every week.