August 20, 2008
Asia Grain Outlook on Wednesday: Rice prices may fall more as baht weakens
Asian rice prices are poised Wednesday to continue to fall over the next few days as the Thai baht weakens against the U.S. dollar.
"The weaker baht is putting pressure on dollar-denominated rice export prices," said a trader in Bangkok.
Traders said demand for Thai white rice is back to normal levels after frenzied demand in May and June. Thailand is the world's biggest rice exporter.
Demand remains robust for Thai parboiled rice, mostly from African countries, which have had to rely on Thailand for their supply of parboiled rice after India banned non-basmati rice exports in March.
On the supply side, exporters aren't able to buy much rice in the local market these days, as farmers are selling their paddy to the government at state-set intervention prices.
However, traders are optimistic that the government will decide to sell rice from its stocks to exporters in the next one-two weeks.
Thai 100% grade A rice is being sold at US$720 a tonne, while parboiled rice is selling at US$750-US$770/tonne, free on board.
In Vietnam, another major exporting nation, the government damped export demand by raising the minimum export price to US$600/tonne last Thursday, from US$550/tonne earlier.
However, a trader in Vietnam said that demand from Africa remains robust.
"The demand from Africa is quite strong for 5% and 15% broken rice. Right now, vessels bound for Africa are being loaded with rice while more shipments are due next month, too," said a trader in Ho Chi Minh City.
In other grains, Pakistan indefinitely postponed awarding a tender to buy 250,000 tonnes of wheat since domestic stocks may not be sufficient to meet demand.
Chicago Board of Trade grains futures remain volatile, with wide swings mostly based on technical factors and external market influences, and with fundamentals playing only a minor role.
After settling lower in overnight trading, soybean and wheat futures bounced back in Wednesday morning trade on bargain hunting.
CBOT corn futures followed through on overnight gains, tracking Nymex crude's uptick.
At 0543 GMT, the CBOT December corn contract is trading 9 cents higher, at US$5.93 a bushel, while the November soybean contract is trading 21.2 cents higher, at US$12.97/bushel.