May 25, 2009

Thai rice traders expect the government to finalize the release of 2.4 million metric tonnes of its rice stock this week, auctioning for which was held May 6, according to a report by the U.S. Department of Agriculture received by email Saturday.

The report said the final prices at which the rice will be sold would be US$30-US$60 a metric tonne higher than the actual bids. There was controversy after the bidding concluded May 6, since the offered bids would have resulted in significant losses for the government.

The USDA added that Thailand's four top exporters are likely to get the bulk of the rice.

It added that the stock release will likely push Thai white rice export prices below US$500/tonne from around US$540/tonne at present.

According to the Thai government, Thailand's rice exports in the Jan. 1-May 7 period totaled 2.9 million tonnes, down 30% on year.

Rice exports from Thailand have fallen as good harvests in several countries have curtailed demand, while Vietnam is able to sell white rice at much lower prices than Thailand.

However, a factor that will likely provide support to rice prices is India's reluctance to lift a ban on rice exports, in place since early 2008. It seems unlikely that the Indian government would allow rice exports until the new rice crop is harvested in September and October.

In other news, China's soy imports are picking up after some sluggishness over the past few weeks due to the swine flu scare, said Tim Hannagan, analyst with U.S.-based commodities broking firm Alaron.

Hannagan said China bought 192,000 tonnes of U.S. soys compared with 132,000 tonnes in the preceding week.

He added that Chinese buying is expected to remain strong in June but may slow down in July and August, a typically heavy soy buying season when prices rise, before picking up the import pace from September onward, once the new U.S. soy crop hits the market.