Export prices for rice from Thailand jumped to their highest in more than two-and-a-half years as a drought threatened to sap supply, in turn boosting demand for a relatively cheaper variety from top exporter India.
Prices of second largest exporter Thailand's benchmark 5% broken rice rose to their highest since June 2017 at $440-$460 per tonne, from $435-$445 the week before, with traders attributing the jump to concerns that the ongoing drought will squeeze supply.
"The market is worried about the shortening of supply, so some mills are refusing to sell, pushing the price higher," a Bangkok-based trader said.
A strong baht, which is trading close to an over six-year peak, is also another factor keeping Thai prices high despite the lack of fresh demand.
"Things have been very quiet, there were some small deals with markets like Iraq but so far nothing big enough to impact price," a Bangkok-based trader said.
The high Thai prices prompted some buyers to opt for rice from India, pushing rates for the Indian variety to their highest in nearly three months.
India's 5% broken parboiled variety rose to around $366-$371 per tonne from last week's $364-$368, the highest since Oct. 31, further supported by higher demand from African countries.
"Demand has been improving slowly. Since Thai prices are moving up quickly, some demand is getting diverted to India," said an exporter based at Kakinada in the southern state of Andhra Pradesh.
In neighbouring Bangladesh, domestic rice prices have risen this week despite good crops and sufficient stocks, which consumers blamed on poor market monitoring.
A senior commerce ministry official denied these claims, and said legal action will be taken if any traders try to stockpile rice to make windfall profits.
Vietnam's markets, meanwhile, are closed from Jan. 23-29 for the Lunar New Year holiday.
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