Rising stockpiles keep pressure on rice prices; demand remains thin in Asia

Rising stockpiles kept downward pressure on Asian rice prices this week and were expected to drag values down further over the coming weeks as demand remains thin, traders said on Wednesday. Rice prices in Vietnam, the world's second biggest exporter, extended losses this week, with 5-percent broken rice offered at $390-$395 a tonne, down from last week's $400.
The 25-percent broken rice grade fell to $365-$370 a tonne, FOB basis, from $375 a tonne a week ago. "Prices are expected to stay low in May when the rice stockpiling scheme ends," a Vietnamese trader in Ho Chi Minh City said. Prices were expected to fall further as Vietnamese rice companies completed buying 2 million tonnes of winter-spring grain on March 31. They will keep the grain off the market enjoying interest-free loans for their purchases under the government's stockpiling program, but once the scheme is over on May 20, they will have to sell the grains.
"Companies will have to sell the grain to avoid high interest rates," said the Ho Chi Minh City trader Last week, Vietnam's central bank cut its policy interest rate by 1 percentage point to 8 percent to boost growth. But, that was far above the Thai policy rate, which held at 2.75 percent. Vietnam's Agriculture Ministry forecast the crop's paddy output at 10.6 million tonnes. In Thailand, prices also eased back. The 5 percent broken grade white rice was quoted at $540 per tonne, down from last week's $545 and expected to fall further due to rising supply as the government planned to sell stocks from state warehouses.
A senior commerce ministry official said the government planned to open a tender to sell up to 500,000 tonnes of rice in April, but he declined to give further details. Besides the government stock release, farmers will also likely be selling some rice grades to private millers as the government removed 18 varieties from its rice-purchase programme. Other major rice exporters also lowered their offers to attract buyers. Indian common rice grades were quoted $385-$450 per tonne, unchanged from the previous week. The same grade of Pakistan rice was offered around $425-$435 per tonne.