May 18, 2009
Asia Grain Outlook on Monday: Thai rice sale gets low bids; may negotiate
The Thai government's May 6 tender to auction 3 million metric tonnes of rice to exporters attracted a large number of bids at prices lower than those prevailing locally, according to a U.S. Department of Agriculture report.
The USDA report e-mailed over the weekend said that bids for the 5% broken white rice were 15%-40% lower than the current price range of US$510-US$530 a metric tonne.
It said the country may negotiate higher prices with potential buyers. If the government accepts the current bids, it could stand to lose US$90-US$140/tonne. Low export demand for rice could be one of the reasons for the lower bids. The USDA also reported that Thailand's cabinet has earlier this month expanded the intervention program for the current paddy crop to 4 million tonnes from 2.5 million tonnes earlier. The purchase price for the additional crop will stay unchanged at US$310-US$345/tonne, around 25%-30% higher than the current market rate for paddy.
The intervention program, or a government initiative typically aimed at buying agricultural goods at rates higher than those prevailing in the market to ensure a steady income for farmers, is expected to meet its target of 4 million tonnes by July 31.
The USDA said the expansion of the program could arrest a slide in Thailand's local rice prices.
In another report, the USDA said that Japan's soy imports may rise to 3.9 million tonnes in this calendar year compared with 3.6 million tonnes in 2008.
Soy imports in Japan fell last year, as high prices in the first half of 2008 and the worsening recession in the subsequent months forced people to cut consumption of soy-based products and soyoil.
Separately, India may resume futures trading in wheat this week, after a ban, put in place since February 2007, was revoked by the government Friday.
The ban was removed as the country's foodgrain prices have stabilized, evident from the government's plan to allow private companies export as much as 2 million tonnes of wheat. The move is expected to be ratified soon by the government, reinstated after its victory in the recent federal elections.
