September 12, 2008

 

Asia Grain Outlook on Friday: Thai rice prices up on low domestic supply
  

 

Thailand's rice export prices may rise in the week ahead as traders struggle to source the grain for overseas shipment with farmers opting to sell their output to the government.

 

"Farmers are preferring to sell paddy to the government, as the state-set intervention price of THB14,000/metric tonne is attractive," said a trader in Bangkok.

 

The announcement to extend the intervention program to the next crop, harvesting for which will begin by Oct. 15, may continue to make it difficult for exporters to find the grain, he said. Procurement for the forthcoming crop, which is the country's main paddy crop, will continue until February 2009. Under the intervention program, the government procures rice at a fixed price to ensure steady income for farmers.

 

"The extension obviously is bullish news for rice prices, and supply may continue to remain tight for exporters over the next few months," the trader added.

 

Thai traders said the government's plan to sell rice from its stocks to exporters seem to be a remote possibility in the near-term with the political uncertainty gripping the country.

 

Meanwhile, demand for Thai rice remains steady, with traders saying Iraq may be buying 15,000 tonnes of white rice this month, while there's talk that Iran may enter the market to buy the grain soon.

 

Nigeria has also placed orders for 150,000 tonnes parboiled rice around 10 days ago, traders added.

 

They said that price of 100% grade-B rice has risen US$10 over the week and is currently trading at US$740/tonne, free-on-board Bangkok.

 

Thailand is the world's largest rice exporter, followed by Vietnam.

 

In Vietnam, demand is sluggish even as rice prices are softening as the recent harvest has kept the market well-supplied.

 

"We have some demand from African countries, that's about it," said a trader in Hanoi.

 

Price of 5% broken rice in Hanoi is currently around US$540/tonne, down US$20 this week.

 

In other grains, world's corn and soybean markets are keenly awaiting the critical production and supply and demand estimates report from the U.S. Department of Agriculture, to be released at 8.30 a.m. EDT on Friday.

 

The report will give estimates of the U.S. corn and soybean crops, though analysts are saying the estimates may be off-the-mark, as late sowing of these crops this year has left USDA with less information than it needs to make accurate predictions.

 

According to a Dow Jones Newswires survey of analysts, there's expectation the USDA might reduce its corn production estimate to 12.152 billion bushels from 12.288 billion bushels in its August report, while soybean production may be revised to 2.950 billion bushels, down from August estimate of 2.973 billion bushels.