April 7, 2008

 

Asia Grain Outlook on Wednesday: Rice prices unlikely to fall this week

 

 

Rice prices are unlikely to fall during the rest of this week despite sharp losses in Tuesday's Chicago Board of Trade rice contracts.

 

"CBOT prices had risen a lot during the past few sessions, so a correction was expected," said a trader in Thailand. "Anyway, Thai export rice prices are not driven by CBOT prices but by actual demand, which is still strong."

 

The trader said two rice tenders this month will be keenly watched for near-term price direction.

 

The key tender is the Philippine rice tender, to be concluded on April 17, seeking to buy 500,000 metric tonnes.

 

"If Vietnam's exporters bid US$900/tonne for the 25% broken rice sought in the tender, the prices of Thai 100% grade B rice will likely rise above US$1,000/tonne," the trader said.

 

Thai 100% grade B rice currently costs around US$800/tonne. It is of a superior quality compared with 25% broken rice. A US$1,000/tonne level for non-aromatic rice will be a record level.

 

In aromatic rice, India's basmati is already trading at up to US$1,400/tonne.

 

The second tender this month is slated for April 22, when Japan's Ministry of Agriculture will seek to buy 60,000 tonnes. The Japanese tender is a mix of different grades of rice.

 

However, traders in Thailand and Pakistan said white rice prices could see some easing as the current high levels could damp demand.

 

"People will simply stop eating rice and switch to other alternatives if prices rise any higher," said a trader in Lahore.

 

In other news, Japan's Ministry of Agriculture is seeking 70,000 tonnes of wheat in a tender to be concluded Thursday.