Thai rice prices hit seven-month high on tight market supply

Thai rice prices hit a seven-month high this week on tight market supply as the government moved to stockpile the grain to push up prices amid falling foreign demand, traders said. The price of benchmark 100 percent B grade Thai white rice rose 5 percent to $640 per tonne from last week's $610. The 5 percent broken grade white rice was at $612 per tonne, up from last week's $595.
"It's just an offer price because no one is going to buy at these high prices," said a Bangkok-based exporter. Milled rice in the domestic market has jumped to 18,000 baht ($570) per tonne from 16,000-17,000 baht in the past few weeks as the government keeps buying grain to support poor farmers.
The government is paying farmers 15,000 baht per tonne for paddy and holds it in stockpiles. The government's stocks have now hit a record high of 12.6 million tonnes of paddy and could go much higher as the intervention runs until the end of June. Traders said the market was very quiet as major buyers, including the Philippines and Indonesia, were holding back on purchases. With uncompetitive prices and falling demand, Thai rice exports have fallen 44 percent this year to 2.4 million tonnes, down from 4.3 million tonnes in the same period of last year.
In Vietnam, rice prices slipped as loading demand subsided, and there were no new deals, traders said. The 5 percent broken rice dropped to $430 a tonne, free on board Saigon Port, from $440-$445 last Wednesday. The 25 percent broken grade fell to $390 a tonne from $395-$400 a week ago. "Even China is slowing its purchasing so prices have eased this week," a trader in Ho Chi Minh City said, adding he had heard of no demand from other sources.
Loading demand is subdued, with three vessels arriving at Saigon Port in the first 10 days of May to load a combined 10,750 tonnes, after 17 vessels came last month to take nearly 218,000 tonnes, an industry report showed. Vietnam's 2012 rice exports could decline by a quarter from last year to 5.4 million tonnes, the Agriculture Ministry said on May 3 after a fall in the shipment volume in the first quarter ended March. Traders said they were looking out for fresh demand from the Philippines, which wants to buy 120,000 tonnes of rice from either Cambodia, Thailand or Vietnam for its buffer stocks.