January 14, 2009

Thai rice export prices may continue to gain as supply remains limited for exporters, with the government buying up most of the output from farmers at higher-than-prevailing rates to shore up prices.

 

"Most millers are busy milling paddy for the government, and they hardly have time to mill their self-procured paddy," said a trader in Bangkok.

 

The Thai government plans to procure around 8 million metric tonnes of rice from the crop harvested in November and December, and the program is likely to go until the end of next month.

 

The government's purchase at higher prices is making paddy less accessible to private companies, both local rice millers and exporters. The government is paying higher prices to support domestic farmers and build reserves.

 

Thai rice prices fell to US$580/tonne by December after soaring to an all-time high of US$1,000/tonne in May 2008, tracking the plummeting global commodities and financial markets.

 

Traders said that the gain in price accelerated since the beginning of the year, as millers became increasingly busy with milling state-owned paddy.

 

Price of Thailand's best-selling export variety, 100% Grade B, has soared around 18% on month, to US$625/tonne, free-on-board basis, Bangkok.

 

Parboiled rice, which is selling at US$660/tonne, is largely unavailable in the local market.

 

Still, traders said that there isn't much export demand at present, with most of the buying coming in from regular buyers, such as countries in the Middle East.

 

In some potentially bearish news for global rice prices, Sharad Pawar, India's agriculture minister, said Tuesday that the country may review a ban on white rice exports, in place since early last year, as the country's currently sown crop may yield a bumper harvest.

 

India has ample foodgrains stock after good rice and wheat crops in 2008, and expects a bumper wheat harvest this year.

 

In deals this week, the Korea Feed Association bought 55,000 metric tonnes U.S. corn at US$187/tonne, for delivery on March 30.

 

Japan's Ministry of Agriculture will likely conclude a tender to buy a total 157,000 tonnes wheat from the U.S., Canada and Australia on Thursday.

 

A wheat import deal expected by Pakistan this week has been delayed, as the state-run Trading Corporation of Pakistan extended the deadline for the submission of bids for importing 250,000 tonnes of U.S. white wheat to Jan. 24 from Jan. 10.