March 6, 2009

The Thai government, which is likely to begin its procurement program for the new rice crop from mid-March, may consider a reduction in its intervention price, a rice industry executive said Friday.

"Thailand may soon start the procurement program for this season. There are some indications that the procurement price could be reduced from the last program (that ended Feb. 28), though there's a lot of resistance to it," said Chookiat Ophaswongse, president of the Thai Rice Exporters' Association.

According to industry sources, the Thai government is considering a cut in the procurement price to THB11,000 a metric tonne from THB12,000/tonne in the last program, in which the government bought 6 million tonnes.

Chookiat said exporters will welcome any reduction in the intervention price as it will allow them to procure more rice in the open market.

"The export price of rice may come down by US$10-US$20/tonne if the government cuts its procurement price," said Chookiat.

Currently, Thai white rice sells at US$620/tonne, which is quite uncompetitive in the world market, since neighbor Vietnam is selling white rice around US$450/tonne.

So far this year, Vietnamese companies have signed deals to export 3.7 million tonnes of rice, more than double the volume contracted a year ago, thanks to a bumper harvest. Of this, 3.0 million-3.4 million tonnes will be shipped in the first half of 2009.

"There's not much demand for Thai white rice right now, apart from some buying from Japan, which recently bought 50,000 tonnes," said Chookiat.

He also said the new rice crop in Thailand, which will be harvested from late March until end-April, is likely to be 3 million-4 million tonnes.