April 20, 2009

Export demand for Thai rice is expected to remain sluggish in the near term as buyers wait for clarity on India's rice export policy.

"Most rice customers, especially for parboiled sorts, are waiting to see whether the new Indian government will lift the ban on white and parboiled rice exports," said Chookiat Ophaswongse, president of The Rice Exporters Association of Thailand.

India is in the midst of a general election, which is expected to lead to a new government being formed by early June. Analysts have said there's a strong likelihood of the new government revoking a ban on white and parboiled rice exports, in place since 2008.

Apart from the India factor, Chookiat said most major buyers of Thai rice have also covered their import requirements for the second quarter of 2009, and will likely return to the market after a few weeks, when they begin purchases for the third quarter.

While the aforementioned factors are keeping Thai rice exports subdued, there was hardly any trading in Thailand last week due to holidays the whole week.

As the rice export demand has been sluggish, Thai farmers want the government to procure more paddy through its intervention program, as the state-set price is higher than open market prices.

The government is expected to procure 2 million metric tonnes of paddy from the crop being harvested currently.

Meantime, the export prices of rice remained by and large unchanged over the week.

While 100% grade B white rice is being quoted at US$550-US$560/tonne, parboiled rice is being offered at US$560-US$570/tonne. All prices are on a free-on-board basis in Bangkok.