September 22, 2008

 

Asia Grain Outlook on Monday: Thai rice prices may fall on weak demand
  

 

Rice prices in Thailand are likely to drift slightly lower this week on weak demand.

 

Traders in Thailand said hardly any exports took place last week, as most countries are staying away from the rice market.

 

"One exporter bought 2,000 metric tonnes of rice in the local market for export purposes. That was last week's biggest single purchase by an exporter," said a trader in Bangkok, adding that in earlier weeks, the biggest single purchase in a week could easily exceed 10,000 tonnes.

 

Traders said the ongoing Muslim holy month of Ramadan has curbed rice demand in the Middle East.

 

"Especially in the last 10 days, hardly any rice trader is working in the Middle East, so there's no sales," said the trader.

 

Traders said the Middle East is likely to resume buying early next month, at the conclusion of Ramadan.

 

Meanwhile, paddy supply for Thai rice millers remains scant as farmers continue to sell rice to the government.

 

While the government had earlier set a target of purchasing 2.5 million tonnes of the current crop, it has now decided to buy 1 million tonnes more from this crop.

 

Traders said that as the government's granaries are swelling with rice, it will soon have to start sales to exporters, since the government will likely start buying rice in November from the next crop, harvesting for which begins late next month.

 

Traders expect government rice sales to begin sometime in October, which is likely to push down prices, since there's not much export demand in the global rice market.

 

Thailand is the world's largest rice exporter.

 

Monday, 100% grade A white rice is selling at US$740-US$750/tonne, free-on-board Bangkok, almost unchanged since last Monday.

 

In grain deals this week, Japan's Ministry of Agriculture may buy imported wheat in its weekly wheat tender after canceling a tender last week without giving any reason.

 

At the Chicago Board of Trade, grains are higher in Monday morning trading, extending Friday's pit-trade gains as markets are relieved at the U.S. government's massive bailout plan for banks offering relief to the financial markets.

 

Fundamentally, there's not much fresh news to move any grains, with no indications yet of early frost developing next month in the U.S. Midwest that could hurt soybean and corn crops there. Other than frost risk, the estimated size of the U.S. corn and soybean crops is factored into current prices and is unlikely to spur any price rally or crash.

 

At 0646 GMT, CBOT December corn was at US$5.47 a bushel or 5.2 cents higher from Friday's pit-trade closing. CBOT November soybeans were 24.4 cents higher at US$11.68/bushel, while December wheat was up 11 cents at US$7.29/bushel.