Asian rice prices were little changed on Wednesday as intervention schemes provided support, but the market remained soft due to a seasonal rise in supply and news of possible Thai sales from government stockpiles. The price of Thailand's 100 percent B grade white rice eased slightly to $510 per tonne from last week's $520, well below the $600 quoted early in the year and less than half the record high of $1,080 per tonne in April 2008.
"Demand remains thin as buyers realised supply is about to peak and they don't need to be in any rush to buy," one trader said. Supply was rising as farmers have started harvesting Thailand's second crop, which is likely to produce around 7 million tonnes of paddy, according to the Agriculture Ministry.
The government started buying rice in late February, offering to buy paddy from farmers at 10,000 baht ($310) per tonne, well above market prices of around 8,000 baht. Traders said news the government planned to sell some of the estimated six million tonnes of rice in its stockpiles would weigh on prices.
The government wants to sell grain in government-to-government deals over the next two months. The commerce minister said it could sell roughly 1 or 2 million tonnes. Export prices were likely to fall further if the government managed to sell a significant amount, traders said. Thailand is the world's biggest rice exporter and Vietnam is the second biggest.
STOCKPILES IN VIETNAM Despite a rise in supply in Vietnam, prices there were steady this week because of a government-backed stockpiling programme. An exporter in Ho Chi Minh City said several foreign trading houses bid for 5 percent broken rice at $380 to $390 a tonne, free on board, below the floor of $400 a tonne set last week by the Vietnam Food Association.
"Buyers wanted to get grain but we can't sell, given the floor in place," the exporter said. Exporters need to get approval from the association for their contract price before they can proceed with loading. The food association said its members had bought winter-spring paddy equivalent to 1 million tonnes of milled rice and were now taking in more grain in line with the plan to stockpile 1.5 million tonnes by next month.
Official figures showed January-March rice exports dropped an estimated 31 percent from a year earlier to 1.23 million tonnes because of thin demand. Traders said the stockpiling scheme would stop prices from falling sharply but wouldn't push them higher as supply was coming in from the harvest in the Mekong Delta, which is expected to end in two weeks.
Output from the Delta could edge up 1.2 percent this year to 9.9 million tonnes, according to a government report last Friday. Farmers in the Delta have harvested 1.4 million hectares (3.5 million acres) of winter-spring rice, 83 percent of what is the biggest of the Delta's three annual crops, agricultural reports said.