Most grades of Thai rice were quoted slightly lower on Thursday after a government sale tender, but sentiment remained firm, supported by supply concerns, traders said. Thai 100 percent B grade was quoted at $314 per tonne, free on board, down from last week's $315.
Thai 100 percent premium grade fragrant rice was at $499 per tonne, down from $500 a tonne last week. "Though the government hasn't decided how much it would sell, there has been some pressure on prices," an exporter said. The government held a tender to sell 300,000 tonnes of fragrant rice from the 2004/05 crop and 120,000 tonnes from the 2005/06 crop.
"The old 2004/05 crop can be sold internationally and domestically, but the new 2005/06 crop must be exported only," a trader said. "We don't expected that the government will sell all the 420,000 tonnes. Another trader agreed.
"It might keep quite a big amount of rice to play with prices later," he said. Last month, the government sold 136,000 tonnes of fragrant rice from 2004/05 crop by tender, less than the 440,000 tonnes it had expected to sell.
However, prices were expected to hold firm over the next few weeks as there was demand for loading during July, mostly for Iraq and Iran, traders said. Exporter President Agri Trading has sold around 100,000 tonnes of 5 percent white rice to Iraq through an international trading house at around $310 per tonne for July and August shipment.
It also sold 100,000 tonnes to Iran in May for June and July shipment. "Despite no fresh demand right now, prices are firm, supported by loading demand for the Iraq and Iran deals," an exporter said.
Iran was estimated to have bought up to 800,000 so far this year, but traders said they did not expect it to be in a rush to buy more because the possibility of trade sanctions had eased as the tone of its nuclear dispute with the West improved.
Tehran has softened its position slightly and agreed to talks, but it has shown no sign of being ready to stop its nuclear enrichment programme. Traders said Thailand would probably sell less rice to Iran than expected as a result of the improved situation.
Iranian officials were expected to visit Thailand and Vietnam in November to seek around 300,000 tonnes of rice for year-end shipment, traders said, but not all agreed it would take that much. "Iran won't buy that much in November.
It is the harvesting period, which will give them plenty of time to bargain for lower prices," a trader said. Iran is in talks with President Agri Trading to buy around 120,000 tonnes, but no deal has been done yet and traders said they did not expect one any time soon.