November 12, 2008
Asia Grain Outlook on Wednesday: Thai new crop rice prices may keep rising
Prices for Thailand's new rice crop, harvesting of which is ongoing, are likely to remain high in the near term thanks to a state-backed price intervention program.
The government is buying rice from farmers at higher-than-market prices.
"If rice millers want to buy rice for export or domestic use from farmers, they will have to match intervention prices or farmers won't sell to them," a trader in Bangkok said.
Prices of white rice and parboiled rice have risen by around US$10/tonne in the past week, he added.
Parboiled rice is being quoted at US$540/tonne while 100% grade A white rice is being quoted at around US$570/tonne.
However, the trader said that prices of old crop rice may fall in the next several days if the government sells old crop stock of around 3 million tonnes below around US$500/tonne.
Many exporters and millers have submitted bids in a recent government auction to sell the stock, and the government may start awarding lots this week, traders said.
On the demand side, most rice importers are on the sidelines, waiting for prices to fall before buying.
There's also some talk that India may phase out its ban on non-basmati rice exports by the end of this month, which is also giving pause to importers.
The rice market is likely to get a fillip when the Philippines, a major Asian rice importer, resumes its rice imports later this year to stock up for next year.
In deal news, Japan's Ministry of Agriculture is seeking 100,000 metric tonnes of U.S. wheat in its weekly tender to be concluded Thursday.
In the past three weekly tenders, the ministry has rejected all bids for U.S. wheat.
Wheat prices have been weakening over the past several weeks on the back of bumper wheat harvests around the world. Prices are likely to be pressured further, as two major Southern Hemisphere producers, Australia and Argentina, prepare to harvest their crops next month.