Vietnamese rice prices hit a three-year high on Wednesday because of demand for loading, while a combination of a stronger Thai baht and speculation about intervention by the new government kept Thai prices firm despite thin demand. Traders said offers for Vietnam's 5 percent broken rice rose to $550-$560 a tonne, free on board (FOB), from last week's $530.It was last at that level in September 2008.
Its 25 percent broken rice rose to $500-$520 a tonne from $495 a week ago. "I think Vietnamese rice prices are likely to stay at high levels for a while as demand is strong," said an Indian trader based in Bangkok who trades Vietnamese rice. Domestic prices in Vietnam have risen 5 percent in the past week on high loading demand, partly for Indonesia.
Traders said there were no new deals due to high prices. Compared with the end of July, when Vietnam sold a record of 1 million tonnes, including 500,000 tonnes to Indonesia, prices have risen more than 6 percent.Thai rice prices also rose, but in contrast to the situation in Vietnam, that was not due to strong demand but because of a stronger Thai baht and speculation about the policies of the incoming government, traders said.
"Exporters need to offer at higher prices in dollar terms to offset the drop in their earnings in Thai baht as the currency is stronger," said Kiattisak Kallayasirivat of Novel Agritrade. The baht and other Asian currencies rose on Wednesday, supported by a rebound in share prices.At 0602 GMT, the baht was at 29.81 per dollar versus 29.88 on Tuesday.
The benchmark 100 percent B grade Thai white rice was offered at $560 a tonne, up from last week's $555 per tonne, exporters said. "There was no demand at all and I think that could cut Thai exports sharply in August, as high prices have made buyers turn away from Thai-origin rice," said another Bangkok-based trader. Thailand, the world's biggest rice exporter, has exported 7.5 million tonnes so far this year, up from the same period last year when it sold 4.8 million tonnes.
HOARDING Thailand's new government has promised to buy paddy rice from farmers at 15,000 baht ($501) per tonne, double the current market price of around 7,000 baht. That has encouraged hoarding by operators expecting to make a profit when the policy is implemented in coming months. Profiteers in neighbouring Cambodia and Myanmar as well as Vietnam are getting in on the act, aiming to take advantage of high prices in Thailand later in the year, traders said.