Asia Grain Outlook on Friday: Rice prices may ease on thai stock sales

 

 

Regional rice prices may ease slightly in coming sessions, pressured by news that the Thai government will release more rice from its 7 million-metric-tonne stockpile in a tender early next week, traders said Friday.

 

The government is set to release around 300,000 tonnes of rice through the Agricultural Futures Exchange of Thailand in a tender Monday, officials said.

 

The government last month released 300,000 tonnes of Hom Mali rice through AFET in an auction, but only bids for around 190,000 tonnes were accepted, officials said then.

 

"The exact volume to be sold isn't yet clear, but it's quite a big lot - in the region of 300,000 tonnes," said Chookiat Ophaswongse, president of the Thai Rice Exporters Association.

 

Traders previously said Thai rice prices could fall if the government releases stocks too quickly. But stockpiles are still at unprecedented high levels, with the main harvest season due to start in November.

 

Meanwhile, Thai parboiled rice exports to Africa, which had doubled to around 300,000 tonnes a month following an extension of India's rice export ban, also appear to be slowing; export volume could fall by around 100,000 tonnes this month, Chookiat said.

 

"When India extended its rice export ban, there was a rush and some panic buying, but it now appears Africa may have overbought," he said.

 

Chookiat said he didn't expect prices to fall too steeply, in the near term at least, as supply is still relatively tight following the government stockpiling scheme.

 

Thai parboiled rice was being offered Thursday at US$615/tonne, free on board, compared with US$623/tonne last week, while Thai 5% white rice prices rose slightly to US$539/tonne compared with US$533/tonne a week ago.

 

Meanwhile, Vietnam's prime Minister, Nguyen Tan Dung, this week asked the state-run Southern Food Corp. to buy 500,000 metric tonnes of rice to help maintain profitability for farmers.

 

Earlier this month, the Vietnam Food Association asked rice traders to buy 500,000 tonnes of rice from farmers at VND3.8 million (US$213) per tonne or more, to try and bolster prices. Since that announcement prices have held steady around US$230/tonne, observers said.

 

In other regional grain news, The Philippine National Food Authority said Friday it plans to buy up to 600,000 metric tonnes of corn on the local market - double its original target volume of 300,000 tonnes.

 

The state-owned grain trading firm's new target volume is intended to keep local prices from falling further.

 

The agency is implementing a two-tiered buying mechanism where half of the corn would be procured at PHP13 a kilogram and the other half at PHP10/kg, NFA administrator Jessup Navarro told reporters.

 

Meanwhile, following a lengthy period of underperformance, corn fundamentals appear to be turning more positive, with demand likely to pick up amid weak prices, Barclays Capital said in a commodities outlook report Thursday.

 

"There have been some significant recent downward revisions to global corn supplies and inventories, with higher U.S. supplies more than offset by downward revisions to Southern Hemisphere and Chinese production. (But) U.S. ethanol margins are strengthening and a pickup in feed demand should transpire over coming months," BarCap said.