BANGKOK: The export price of Thailand’s benchmark rice rose to $670-$680
a tonne on Friday from $650 in mid-week after the government started an
intervention scheme that gives farmers a big increase in the farmgate
price, industry officials said on Friday.
“Offer prices have risen to $670-$680 a tonne, but I don’t think we’ll really sell at these levels as demand is very thin. Buyers are staying on the sidelines, waiting for clear direction,” said Wanlop Pichpongsa of Capital Rice.
The government is paying farmers 15,000 baht ($483) a tonne for unmilled rice from October 7 to the end of February, a period covering the harvesting of the country’s main crop.
That compares with a market price of 10,000 baht earlier this week and just 7,000 to 8,000 baht in June, ahead of a general election on July 3 that brought the present government to power. The export price then was just below $500 a tonne. The new intervention price could translate into an export price of around $850 a tonne for the benchmark 100 percent B grade white rice, exporters said, a level that could persuade buyers to switch to cheaper origins such as India and Vietnam.
However, traders and analysts said they did not expect prices to jump above $800 right away as some exporters will have bought rice in advance and would be able to offer it at lower levels.
But buyers were few and far between on Friday.
“Prices might be pushed higher by the government, but they shouldn’t rise sharply and immediately as demand isn’t strong,” said Korbsook Iamsuri, president of the Thai Rice Exporters Association.
Chookiat Ophaswongse, a honorary president of the assocation, added: “Buyers are in no hurry as they can choose to buy from India and Vietnam, where prices are well below Thai prices.” India, which suspended exports in late 2007, authorised the export of 2 million tonnes of non-basmati rice in September and its leading trading firm has offered to sell at just $470 a tonne.
In Vietnam, the world’s second-biggest rice exporter after Thailand, the price of its 5 percent broken grade stood at $575-$580 a tonne, exporters said.
Crop damage: Prices could be given another lift by the flooding that has hit huge swathes of Thailand in recent weeks, especially rice-growing areas in the centre and northeast.
Yanyong Puangrach, a permanent secretary at the Commerce Ministry, which oversees the rice-buying programme, said the government had revised down its forecast for the crop to 21 million tonnes from 25 million because of the flooding. He said the government was prepared to buy all of rice from the crop. “We have the ability to buy all of the 20-21 million tonnes. However, we may not have to buy that much if prices rise to a satisfactory level,” he said.
Economists are worried about the cost of the programme, which was put as high as 410 billion baht when the main crop was estimated at 25 million tonnes. That compares with a projected budget deficit for the current fiscal year of 350 billion. reuters
“Offer prices have risen to $670-$680 a tonne, but I don’t think we’ll really sell at these levels as demand is very thin. Buyers are staying on the sidelines, waiting for clear direction,” said Wanlop Pichpongsa of Capital Rice.
The government is paying farmers 15,000 baht ($483) a tonne for unmilled rice from October 7 to the end of February, a period covering the harvesting of the country’s main crop.
That compares with a market price of 10,000 baht earlier this week and just 7,000 to 8,000 baht in June, ahead of a general election on July 3 that brought the present government to power. The export price then was just below $500 a tonne. The new intervention price could translate into an export price of around $850 a tonne for the benchmark 100 percent B grade white rice, exporters said, a level that could persuade buyers to switch to cheaper origins such as India and Vietnam.
However, traders and analysts said they did not expect prices to jump above $800 right away as some exporters will have bought rice in advance and would be able to offer it at lower levels.
But buyers were few and far between on Friday.
“Prices might be pushed higher by the government, but they shouldn’t rise sharply and immediately as demand isn’t strong,” said Korbsook Iamsuri, president of the Thai Rice Exporters Association.
Chookiat Ophaswongse, a honorary president of the assocation, added: “Buyers are in no hurry as they can choose to buy from India and Vietnam, where prices are well below Thai prices.” India, which suspended exports in late 2007, authorised the export of 2 million tonnes of non-basmati rice in September and its leading trading firm has offered to sell at just $470 a tonne.
In Vietnam, the world’s second-biggest rice exporter after Thailand, the price of its 5 percent broken grade stood at $575-$580 a tonne, exporters said.
Crop damage: Prices could be given another lift by the flooding that has hit huge swathes of Thailand in recent weeks, especially rice-growing areas in the centre and northeast.
Yanyong Puangrach, a permanent secretary at the Commerce Ministry, which oversees the rice-buying programme, said the government had revised down its forecast for the crop to 21 million tonnes from 25 million because of the flooding. He said the government was prepared to buy all of rice from the crop. “We have the ability to buy all of the 20-21 million tonnes. However, we may not have to buy that much if prices rise to a satisfactory level,” he said.
Economists are worried about the cost of the programme, which was put as high as 410 billion baht when the main crop was estimated at 25 million tonnes. That compares with a projected budget deficit for the current fiscal year of 350 billion. reuters
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