March 25, 2009

Thailand is in talks with four bidders for the sale of 450,000 tonnes of corn, half of the 900,000 tonnes in government stocks, according to a senior Commerce Ministry official on Tuesday (Mar 24).

The official said the four bidders offered low prices and the ministry needs to reconsider the sales.

The ministry is negotiating for better prices, the official added.

The bidders submitted prices ranging from THB2.50 to THB5.75 per kg, well below the THB8.50 the government paid to farmers during an intervention scheme that will expire March 31.

The domestic corn price is currently about THB6.50 per kg.

The corn must be exported and cannot be sold domestically as that would force down prices, the official said.

If the ministry cannot get better prices, it would have to ask for cabinet approval as there would be huge losses as the government has bought the corn at high prices, he said.

Thailand spent more than THB100 billion on farm subsidies this year to help farmers who have suffered losses from falling commodity prices.

Analysts said the government would face huge storage costs and would not be able to release the stocks without suffering losses as global commodity prices are falling.

US$1 = THB35.3524 (Mar 25)