Thai rice prices seen easing, crop outlook bright

Thai rice export prices, which have fallen in dollar terms over the past week as the baht currency weakened, are likely to dip further with overseas demand weak, traders said on Thursday. Thai 100 percent grade B rice was down $5 at $290 per tonne, free on board, on Thursday from a week. The baht traded around 40.70-40.74. It was around 40.29 a week ago.
"Trade has been generally quiet. A few African countries, including Nigeria, have been buying, but in small quantities," said one trader. The domestic price of Thai 5 percent white rice grade was steady at 11.10 baht a kg ($273 a tonne) this week from a week ago.
Grade A Jasmine rice's was down further $10 at $390 a tonne free-on-board. The newly developed Thai Pathum Thani grade, which looks, tastes and smells like Jasmine rice, was $330.
"The price of Jasmine grade has been falling due to lack of demand. Overseas buyers have turned to Pathum Thani, which is much cheaper, yet has similar qualities," said one trader.
Farmers started planting the main rice crop this month after the start of the rainy season in mid-May, traders said. "If the good rain continues, we should see a bigger crop," said one trader, referring to the main crop to be harvested in November. The Agriculture Ministry estimates the crop at 21.27 million tonnes, up 14 percent up from 18.64 million tonnes in the previous crop due to attractive domestic prices and expectations of favourable weather.
The paddy price has risen 23 percent to 6,423 baht a tonne over the past two years, backed by high government intervention prices, according to one ministry official.
Drought cut the main crop harvested last November by 2.26 million tonnes to 18.64 million tonnes. Thailand grows two rice crops a year. The main crop relies on rain, while the much smaller crop is grown mainly in irrigated areas.
Between January 1 and May 27, Thailand exported 3.04 million tonnes of rice, 15 percent less than the 3.58 million tonnes shipped in the same period last year. Thailand, the world's largest exporter, shipped a record 10.13 million tonne of rice last year, up from 7.58 million tonnes in 2003. However, drought could trim exports to 8 million tonnes this year from estimates of 8.5 million tonnes, exporters said.