Thai rice higher on drought fears

Thai rice futures firmed on Tuesday on speculative buying amid worries that drought could hit output in some areas, brokers said.
Volume dropped as 209 contracts of five percent white rice traded, compared with 326 last on Friday. "Players bought contracts on concerns about reduced supplies due to drought," said one broker. The most active January contract settled at 9.94 baht per kg on Tuesday, up from 9.88 baht, with the number of contracts traded falling to 144 from last on Friday's 270.
The market was closed on Monday for a public holiday.
Prolonged drought in parts of north-east Thailand is expected to damage 841,000 tonnes of paddy, or about 550,000 tonnes of milled rice, the Agriculture Ministry said on its website (www.oae.go.th) on Tuesday.
"Rain has not been seen since September 22 in several rice growing areas in north-eastern Thailand," said the ministry.
"If the rain does not resume in the next ten days, rice, which needs water before reaching its maturity to be ready for harvest, could be partially damaged," the ministry said.
"It will also be very vulnerable to diseases," it added. The ministry estimated the country's main rice crop at 20.7 million tonnes of paddy, versus the previous crop's 20.9 million.
Brokers expected prices to rise further over the next few days, tracking the spot price on tight supplies as farmers hold stocks and wait to sell at higher prices when the government starts its buying scheme next month.
Sugar premiums steady
Thai sugar premiums are expected to remain steady this week, with exporters keen to strike deals for 2005 shipment ahead of the harvest next month, traders said.
Thai raw sugar premiums for March-May 2005 shipment were offered at 95 points over CSCE futures without bids on Tuesday, unchanged from last week. Traders said that a few deals had been done over the past week for Thai 100 ICUMSA white sugar for March-April shipment.
"Traders at international trading firms have clinched deals to buy Thai 100 ICUMSA white sugar at $8 over London prices," said an official at one large exporting firm.