August 11, 2008

 

Asia Grain Outlook on Monday: Thai rice seen rangebound; government sale key

 

 

Thailand's white rice export prices are likely to remain rangebound in the week ahead as the government is yet to finalize a plan to sell 2 million metric tonnes of the grain to exporters.

 

"The government has been talking of the sale of 2 million tonnes of rice from its stocks to exporters, but since it hasn't happened yet, the market isn't factoring it into prices," said a trader in Bangkok.

 

Traders expect the government to start selling rice to exporters by the end of this month. Prices may fall once the sale starts on increased availability, traders said.

 

Demand for white rice has largely tapered off, as big buyers such as the Philippines and Malaysia have already stocked up on the grain.

 

At present, Thai 100% grade B rice is being quoted in a narrow range of US$725/tonne-US$750/tonne.

 

However, parboiled rice prices are rising on continued demand from countries in Africa.

 

Also, exporters aren't able to get supplies of the grade in the domestic market as most of the paddy sold by farmers is being procured by the government at the state-set intervention price of THB14,000/tonne.

 

At present, parboiled rice is selling at US$780/tonne, free-on-board Bangkok.

 

Meanwhile, paddy crop in India, Asia's second-largest rice producer, is poised for a bumper harvest with acreage covered until Aug. 8 rising 7% on year to 25.11 million hectares.

 

Good rains over the past week in south, central and west India, which hadn't received much rains in July, have also improved the prospects of the crop.

 

The federal government has said it will review in November a decision taken in a March to ban white rice exports. The review will be done once harvesting is complete.

 

However, experts said it is likely that the government may defer a decision on it until April or May, when the wheat crop is harvested, as by then it would have a fair idea of availability of foodgrains in the country.

 

In deals last week, Chinese traders booked 3-5 cargoes of soybeans last week, up from 1-2 cargoes in the preceding week, said commodities analysis firm Shanghai JCI.

 

Most of the soybean has been bought from Argentina for spot shipments. The trader paid a premium of US$3.50-US$3.60/bushel to the Chicago Board of Trade August or September contracts for these shipments.
   

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