Thai rice prices have slipped ahead of a government sale of grain from its stockpiles, which is likely to push prices down further in coming weeks if, as expected, the need for quick cash sees authorities to accept low bids. The price of 5 percent broken grade Thai white rice stood at $470 per tonne, down from last week's $475, traders said.
"The news about the government tenders had an immediate psychological impact and prices are expected to fall further when the tender starts," a Bangkok-based trader said. Commerce Minister Niwatthamrong Bunsongpaisan has said the government would sell around 350,000 tonnes of rice next week and there would be further sales from its stocks this year to fund its intervention scheme for the next main crop in October.
Thailand's rice stocks are currently estimated by officials at 17 million to 18 million tonnes, built up since October 2011 when the government started paying farmers well above the market price for their grain, pushing export prices up to uncompetitive levels. Traders said regional prices were already on a downward trend due to rising supply as the main producing countries are about to start harvesting bumper crops.
"India is due to start harvesting in September followed by Thailand and Vietnam. The Thai stock sales will add an extra surplus onto the market and prices will drop," another Thai trader said. India is forecast to produce 108 million tonnes of milled rice in the 2013/14 main crop, up from 104 million tonnes in the previous year, according to the United States Department of Agriculture (USDA).
Thailand would produce 21 million tonnes, up from 20 million tonnes, in its main crop while Vietnam was expected to have 27.8 million tonnes, up from 27.6 million tonnes, the USDA said. However, in Vietnam, prices rose slightly this week due to limited supply as farmers held back grain, expecting to sell at higher prices, exporters said. The 5 percent broken rice rose to between $400 and $410 a tonne, free on board (FOB), from last week's $400.
The 25 percent broken rice rose to $360-$375 a tonne, FOB, against $340-$355 a week ago. "Farmers are holding rice in stock as they are expecting demand from overseas buyers later this year," one exporter said. Traders said farmers hoped that Vietnam's traditional m markets Indonesia and the Philippines could resume buying in the second half of the year. However, it was not clear whether those two buyers would buy more rice since Indonesia said it would import 600,000 tonnes this year, well below around 1 million tonnes it used to buy.
The Philippines' NFA said it had boosted rice stocks by 14 percent in the first half in a bid to avoid imports in the second half. Vietnam is projected to ship around 4 million tonnes of rice in the second half of 2013, bringing total shipment this year to 7.5 million tonnes, the Vietnam Food Association has said.
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