Sell-off may dent rice prices
Written by changthai11 on Monday, October 6th, 2008
AGRICULTURE
Sell-off may dent rice prices
PHUSADEE ARUNMAS
The government’s plan to sell six million tonnes of rice in its existing stockpile is expected by exporters to put pressure on Thai rice prices over the next few months.
Sumeth Laomoraphorn, president of C. P. Intertrade, one of the country’s leading rice traders, said Thai rice prices were expected to stay at around US$700 per tonne for some time, but warned that price pressure would grow if the government were to sell rice from its stockpile in big lots.
“Traders are just waiting to see what volumes of rice the government will sell and at what prices,” he said.
The government said last week that it planned to accelerate the sale of 2.1 million tonnes of old milled rice and another 3.96 million tonnes of paddy bought under the government’s pledging scheme for the second crop that ended on Sept 30.
The sales would be made through government-to-government deals and through requests to private rice exporters to propose volumes and prices.
Selling prices have yet to be finalised, but the ministry said they would be based on average costs of old and new rice, foreign-exchange rates and prices of grains from other countries.
According to Mr Sumeth, traders are also waiting for more details on the government’s next rice pledging policy for the main crop and the final pledging price.
The government said recently that it aimed to buy eight million tonnes of paddy from the main 2008-09 crop - mostly to be harvested from November - under a pledging scheme designed to prop up prices.
The buying would start from Oct 15 and run until Feb 28.
Under the pledging programme, farmers would be paid 14,000 baht per tonne of paddy of 5% moisture from the main crop, with Thai Hom Mali jasmine paddy at 16,000 baht and glutinous paddy at about 9,000 baht per tonne.
Mr Sumeth said the current market belonged to rice buyers, noting that traders were poised to shift to producers who offer lower prices.
Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said falling demand would not cause Thai prices to drop sharply over the next few months, as prices were still supported by government buying.
“The current rice market is relatively quiet,” he said.
“We expect the country’s rice exports may drop to about 600,000 tonnes in October and the remaining months of the year, from 720,000 tonnes in September.”
Thailand, the world’s leading rice exporter, shipped around one million tonnes per month in the first five months of the year.
The Foreign Trade Department predicted rice exports next year of around nine million to 9.5 million tonnes valued between $4.95 billion and $5.22 billion. This year, rice shipments are forecast to reach 9.5 to 10 million tonnes worth between $5.79 billion and $6 billion.
