Asia Grain Outlook on Monday: Thai rice prices may rise on government buying

 

 

Thai rice prices have stabilized following a recent decline and are expected to move higher in the coming days following reports that the government will continue buying paddy directly from farmers in addition to a new price guarantee program due to commence Nov. 1.

 

Under the new guarantee program - which replaces the former pledging program, under which the government bought paddy directly from farmers at a fixed price of THB11,800 a metric tonne - the government will guarantee that farmers receive a fixed THB10,000/tonne for paddy if the market price falls below that level.

 

But the government has also said it will buy a further 2 million tonnes of paddy directly from farmers at the current market price, which will be reviewed every 15 days, said Chookiat Ophaswongse, president of the Thai Rice Exporters Association.

 

"There is no firm date for the latest program to begin, but it will likely start during the middle of next month when the harvest starts to progress and will run alongside the new guarantee program," he said.

 

"There is already an increase in interest from private exporters, as they are expecting prices to rise in the coming weeks," Chookiat said.

 

"I expect Thai rice prices will rise because of this news - possibly by as much as US$30/tonne - in the coming weeks," he said.

 

Monday, Thai 5% broken white rice was little changed compared with late last week, at US$495/tonne, FOB basis.

 

The Philippines is willing to buy at least 200,000 tonnes of rice from Thailand in an inter-government deal, Agriculture Secretary Arthur Yap said Monday.

 

His comment came a day after the two countries failed to reach an agreement on a planned cut in the rice import tariff imposed by the Philippines, the world's largest rice importer.

 

"We're willing to negotiate for a higher volume...to show our good faith," said Yap.

 

The Philippines initially offered to buy 50,000 tonnes of duty-free rice if Thailand agreed to its plan to keep the tariff at 40% in 2010.

 

Thailand has sought the duty-free privilege on up to 360,000 tonnes of rice.

 

Meanwhile, the Philippines bought 133,000 tonnes of feed-grade wheat from Ukraine last week as local feed millers anticipate a shortage of corn supply following recent typhoons, an industry executive said Monday.

 

The grain will be delivered in three shipments of more than 40,000 tonnes each between November and February at an average price of US$210/tonne, cost and freight, said the executive, who didn't want to be named.

 

In other news, South Korea Monday offered to ship about 10,000 tonnes of corn to North Korea, in what would be the first official aid to its neighbor for almost two years, Agence France-Presse reported.

 

The proposed shipment through the Red Cross would be the first official one since a conservative government came to power in Seoul in February 2008 and linked major assistance to progress on denuclearization.

 

Meanwhile, China's soy imports in September fell 33% on year to 2.75 million tonnes, the General Administration of Customs said Monday.

 

In the January-September period, soy imports rose 13% to 32.36 million tonnes.

 

China is the world's biggest importer of soy and gets most of its supplies from the U.S., Brazil and Argentina, the world's leading soy producers.