Asian commodity and currency markets could be plunged into chaos after the Malaysian Government threatened to abandon standard trading channels in favour of a barter deal.

With Malaysia struggling to shelter its people from the steep rise in the cost of rice and desperate to expand its painfully diminished “buffer” stockpile, its Minister for Plantation Industries and Commodities said that his country would swap palm oil for rice with any rice-producing nation willing to make the trade.

The highly unusual offer marks a significant vote of no-confidence in commodity markets by a country that owes more than a quarter of its GDP to crude oil and palm oil exports.

“Thailand is our main supplier of rice, but we are ready to offer palm oil to any exporting country that is ready to give us rice of suitable quality,” Peter Chin said.

Recent volatility in food prices and the emergence of rice as an asset now thought by some to be on a strategic par with crude oil have shaken many countries' faith in the ability of global markets to price food properly.

Several large rice-producers have curbed exports for the sake of domestic calm, and various barter deals are thought to have been struck behind the scenes. None has been as open as Malaysia's offer, which could be imitated.

The swap deal makes some sense because Malaysia is a leading world producer of palm oil and is reliant on imports for about a third of its annual rice consumption. Palm oil prices have soared amid increased demand from China and India.

Commodities experts fear that similar deals would be unsettling to orderly markets if other raw materials, such as rubber or rare metals, even energy, were moved around in a series of large off-market deals with no formal pricing.

Commodity traders in Tokyo said that Malaysia's decision to barter was a clear sign that food as an asset class was in crisis. Kenji Kobayashi, a commodities analyst at Kanetsu Asset Management, said: “What is worrying is that these barter deals, which should only be for truly terrible situations like the Iraq oil-for-food programme, are going to increase in size and number from here. We are now seeing all the hidden mistrust in the markets being expressed through barter.”

Other observers said that the decision to barter also reflected volatile currency markets and the recent decline of the US dollar, from which poorer developing nations have been eager to insulate themselves.

The Malaysian offer emerged as the price of Thai 100 per cent B grade white rice - used as one of the benchmarks for global prices - surged back to its record high of $1,000 per tonne.

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