Asia's rice market slowed this week, though Thai rice prices jumped to a 20-month high on tight domestic supply, while lower Vietnamese rice prices failed to invite fresh purchases, traders said on Wednesday. Traders said they were also monitoring the price trend as Thailand, the world's second-biggest rice exporter after India, will auction 2.24 million tonnes on June 15.
Thai 5-percent broken rice stood in a wide range of $418-$437 a tonne, free-on-board (FOB) Bangkok, from $420 last week. At $437 a tonne, the price is the highest since October 2014, based on Thomson Reuters data. Low stocks in exporters' hands and low second-crop output has pushed up prices, a trader in Bangkok said. "The market is lacking supply, and there is hardly any new supply," he said. Another trader said prices have started weakening after recent hikes kept buyers away. In Vietnam, the world's third-biggest exporter, rice prices eased on thin buying demand and also because exporters now have access to cheaper loans, traders said.
The 5-percent broken rice, using winter-spring grain, eased to $375 a tonne, FOB Saigon Port, from $375-$380 last week, while the same grade with lower-quality summer-autumn grain dipped to $365 a tonne, from $365-$370 last Wednesday. "The quality is not good, the grain colour isn't bright because rice plants have been knocked down by rain," a Vietnamese exporter said. Rain returned to the Mekong Delta last month, relieving the impact from salination linked to the worst drought in 90 years.
The Vietnamese central bank has allowed banks to extend dollar loans, with rates lower than those on dong loans, to businesses as of June 1. But key Vietnamese rice buyers including China and the Philippines have not returned to the market, even though Vietnam has recent signed a new pact with China to simplify quarantine paperwork to help boost rice exports, traders said.
Additionally China started auctioning rice from state reserves on May 27. "The fact that China is now selling means its buying demand could be less," a trader at a foreign firm in Ho Chi Minh City said. The Philippines has no urgent need to import rice for now, given ample domestic supply, incoming agriculture minister Emmanuel Pinol said on Wednesday. In India, annual monsoon rains has arrived in the southern region on Wednesday, a weather office source said, easing fears over farm and economic growth.
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