Prospects of lower demand from Indonesia and the Philippines dragged Thai rice prices down nearly 4 percent this week, although prices in Vietnam were supported by loading demand, traders said. The drop in Thailand was expected to be limited by government intervention, while a government-backed stockpiling programme should support Vietnamese prices, they said.
Thailand's benchmark 100 percent B grade white rice stood at $515 per tonne, down 3.7 percent from last week's $535. "The market is very quiet and there's no demand elsewhere, even from our traditional clients in Africa," said a Bangkok-based trader.
The Philippines, the world's biggest rice importer, said that this year it would probably buy just a third of the record 2.45 million tonnes it imported in 2010, while Indonesia said it had bought enough to cover its needs for the next six months. Traders said buyers were happy to stay on the sidelines for now, knowing a rise in supply was likely to hold prices down.
In Vietnam, the price of 5 percent broken rice edged up to $475-$480 a tonne from last week's $470-$480, while the 25 percent broken grade held steady at $440-$445 a tonne, free on board. "The market is not dealing with the 25 percent broken at the moment as it is not encouraged for export," a trader in Ho Chi Minh City.
Exporters said they expected falls in prices in Asia to be limited, not because of any recovery in demand but by government intervention. Thai Prime Minister Abhisit Vejjajiva said last week he would raise the state intervention price above the current 10,000 baht ($328) per tonne.
That was a reaction to sporadic protests from farmers, who have blocked traffic among other forms of action to demand higher prices. Traders said higher intervention prices would lead eventually to higher offer prices even if demand remained sluggish.
In Vietnam, rice companies have begun stockpiling paddy from the country's largest rice crop, the winter-spring crop, pushing up prices by around 5 percent on domestic markets, traders said on Monday. The government-backed stockpiling programme aimed to get rice companies to buy grain from farmers to absorb rising supply and support prices.