Asia Grain Outlook on Wednesday: Thailand delays rice sales for higher price

 

 

The Thai government's delay in releasing rice reserves to force prices up probably won't prompt the desired response from trading firms, who insisted their bidding prices were reasonable.

 

"The Commerce Ministry didn't submit the plan to the Cabinet meeting yesterday, as they weren't satisfied with the prices...(But) the bidding prices were just marginally lower than market prices," Thai Rice Exporters Association President Chookiat Ophaswongse said Wednesday.

 

Given the deterioration in quality during storage and the logistics fees, the bidding prices weren't unreasonable, he said.

 

Thailand, Asia's largest rice exporter, plans to bring down its reserves of nearly 6 million metric tonnes to make room for the upcoming harvest in March and take advantage of relatively high world prices.

 

The country may not sell the entire 375,000 tonnes of rice from its reserves it put up for auction last Thursday, Vichak Visetnoi, director-general of the Foreign Trade Department under the Ministry of Commerce, said Tuesday.

 

The next cabinet meeting will be on Tuesday of next week, so there probably won't be any final word on the auction results before then, Chookiat said.

 

Rice prices in the spot market Wednesday are around THB17,000/tonne in Thailand, while the highest bid submitted by trading firms was THB16,200/tonne, he said. The government bought the rice for around THB22,000/tonne two years ago.

 

"The auction prices should be lower than for the current crop, given it (the rice) is two years old," an exporter in Thailand said.

 

Some big exporters have asked the government to release some stocks because they hope to mix it with the current crop, after failing to get enough from the market, he said.

 

Benchmark March rice futures traded on the Chicago Board of Trade settled at US$14.11 per hundredweight, up 14% from a year ago, but have fallen 5% so far this year.

 

The country may only produce about 7 million tonnes of paddy from its second crop, rather than the 8.3 million tonnes forecast earlier, the Bangkok Post reported Tuesday, citing Apichart Jongsakul, secretary-general of the Office of Agricultural Economy. If so, output in the 2009-10 crop year that started Oct. 1 would be around 29 million tonnes.