February 4, 2009

Thai rice export prices are expected to stay at current high levels, with some possibility of further gains in the next few weeks.

 

According to a Bangkok-based trader, a shortage of supply among exporters is driving prices higher - not demand.

 

"There's hardly any paddy in the open market as the government continues its procurement operation," said the trader.

 

Traders said that most millers in Thailand are busy milling rice on behalf of the government.

 

The government procurement program, which will likely stock state granaries with 8 million metric tonnes rice, is expected to end by Feb. 28.

 

According to the International Grains Council, Thailand's rice exports are expected to fall to 9.3 million tonnes, or 6% on year, as state procurement has propelled the nation's rice prices much higher than those of neighboring Vietnam, which is also a major exporter.

 

Thailand's 100% grade B rice is currently trading at US$630 a tonne, while parboiled rice is trading at US$690/tonne. Both prices are free-on-board, Bangkok.

 

Traders added that while white rice prices may stay at current high levels, parboiled rice could make further gains, as demand from Nigeria and the Middle East remains strong.

 

Vietnam and Thailand compete for international white rice business, but Vietnam doesn't produce parboiled rice, allowing Thailand to command higher prices.

 

In other news, South Korean feed companies continue to buy feed wheat instead of corn as abundant global supplies have made wheat cheaper.

 

The Korea Feed Association has bought 165,000 tonnes of feed wheat in a deal with trading house Bunge for June and July shipment.

 

The KFA paid US$175.85/tonne, cost and freight, for the optional origin wheat.

 

Last week, the country's Nonghyup Feed Inc. rejected all offers in a tender to import 165,000 tonnes feed wheat, but it is quite likely they may float a fresh tender in the near term.