November 24, 2008

Asia Grain Outlook on Monday: Government purchases supporting Thai rice prices


Thai export rice prices are unlikely to fall in the week ahead, despite slowing export demand, said traders.


Traders said that while demand for white rice has slowed, the government's intervention program to buy 8 million metric tonnes of paddy is keeping prices high.


Harvesting is going on in Thailand, though the pace has been slowed by heavy rains.


"Farmers are not willing to sell to private millers. They want to sell it to the government for higher prices," said a trader in Bangkok.


Traders said that even in areas where government funds for buying paddy haven't arrived yet, farmers still prefer to hold on to their stocks rather than sell them at cheaper prices to private millers.


The state-set intervention price for white rice is THB12,000/tonne.


Meanwhile, traders said demand for white rice and parboiled rice is largely coming from the Middle East, from countries such as the United Arab Emirates, Yemen and Saudi Arabia.


They said that while these countries are not buying the 10,000-15,000 tonne cargoes they bought earlier in the year, they are buying smaller lots to meet immediate needs.


For parboiled rice, African countries such as Nigeria and Benin continue to buy small quantities.


At present, 100% grade B white rice is being quoted at US$600/tonne, free-on-board Bangkok, while parboiled rice is being quoted at US$580/tonne.


Thailand is losing out on bigger export deals to neighboring Vietnam, where prices are much cheaper.


This month, Vietnam has bagged two big export deals: one for selling 100,000 tonnes of rice to Malaysia and another to export 60,000 tonnes to Iraq.


In other news, China's soybean exports expectedly fell 25% on year in October, as traders had brought in lots of soybeans in September to avoid a 3% import duty levied in October.


However, China - the world's biggest soybean importer - increased its January-October imports by 26% on year to 30.82 million tonnes.


Continued soybean imports by China are essential for supporting soybean prices and boosting soybean acreage in the U.S., Brazil and Argentina in 2009. It remains to be seen whether China can maintain its scorching pace of soybean imports with its economy beginning to slow.

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