November 3, 2008

                      

Asia Grain Outlook on Monday: Thai rice down; intervention offers support

                                           

 

Thai rice export prices are likely to fall further in the next few days on low demand, though a shortfall of domestic rice supplies will provide some support.

 

"Demand is really quiet - most Asian countries have already completed their imports," said a trader in Bangkok.

 

Enquiries for white rice are few and far between these days, he said.

 

Even parboiled rice, which has seen a lot of Nigerian demand in the second half of 2008, has slowed. "Nigeria has bought 400,000-500,000 tonnes of rice over the past few months. They won't need to buy more before January next year," the trader added.

 

However, traders said that prices of export rice are getting some support because of tight domestic supply.

 

Thai farmers are selling most of their rice to the federal government at state-set intervention prices as the government wants to shore up domestic rice prices.

 

The government plans to buy a total of 8 million metric tonnes of milled and unmilled rice from Nov. 1 to Feb. 28, Thai government officials have said.

 

The government hasn't started selling its rice stocks to exporters yet, though a report by the U.S. Department of Agriculture last week said the government may release old-crop rice stocks of around 2.1 million tonnes - likely to the top five Thai rice exporters - next month.

 

It is expected that the government could sell the stocks at around US$400-450 a tonne.

 

The export price of white rice in Thailand is around US$640/tonne, while parboiled is fetching around US$610/tonne.

 

In deal news, the Thai government plans to barter rice for oil with Iran and will soon send a delegation to Tehran to work out details, the Financial Times reported last week.

 

Meantime, Japan's Ministry of Agriculture bought only 21,000 tonnes of Canadian wheat and rejected bids for 75,000 tonnes of U.S. wheat last week.

 

This was the second week in a row the government hasn't bought U.S. wheat, which will be bearish for Chicago Board of Trade wheat futures, as Japan is a major customer of the U.S. grain.