Thailand cancelled a tender to sell 250,535 tonnes of rice from stocks as bids were too low, while prices for the Thai grain in the market remained more expensive than that sourced from other countries due to a state intervention scheme. The quantity offered in the tender accounts for just 3 percent of Thailand's record high stocks of around 8 million tonnes of milled rice, after it bought 15 million tonnes of paddy from farmers in an intervention scheme to push up prices.
But the government is finding it difficult to sell to foreign governments and, as the tender shows, is looking for prices that exporters find unrealistic. "Exporters submitted unacceptably low prices so we cancelled the tender," said Manat Soiploy, head of the Foreign Trade Department, who was in charge of the tender held last week. He said the ministry would hold another tender soon but declined to give a date.
The intervention has pushed Thai export prices to $560-$600 a tonne, well above the same grade of rice from Vietnam and India which was offered at between $390 and $430 per tonne. The intervention scheme, aimed at helping millions of small farmers, finishes at the end of June. Under the scheme, the government is paying farmers 15,000 baht ($470) per tonne for paddy, higher than market prices offered by local millers at around 9,000 baht per tonne.
"Supply is about to rise further as around 3 million tonnes of off-season rice is due to be harvested," a Bangkok-based trader said. On the export market, Thailand's benchmark 100 percent white rice was unchanged from last week at $600 per tonne, exporters said. "Prices are unlikely to fall while the government intervention scheme remains in force," said another Bangkok-based trader.
Because of the uncompetitive prices, Thai exports have dropped by 45 percent so far this year to 3.24 million tonnes from 5.97 million in the same period last year. The Thai Rice Exporters Association expects shipments at around 6.5 million tonnes this year, while Vietnam is aiming to sell at least 6.5 million and India is expected to sell 4 million. In recent years, Thailand has exported 8.0-10.5 million tonnes.
VIETNAM RICE STEADY In Vietnam, rice prices were steady this week, helped by news of a stockpiling plan before the main crop in the Mekong Delta peaks next month, traders said. "The harvest will accelerate in July, so export prices may decline," an exporter in the Delta province of An Giang said, referring to the summer-autumn rice crop harvest.
"Prices are getting support from the news of a government stockpiling plan, while fresh supplies are still thin for now," a trader in Ho Chi Minh City said, adding that buying demand had not picked up yet. Export quotations for the 5 percent broken rice stood unchanged at $405-$415 a tonne, free on board Saigon Port.
The 25 percent broken rice eased to $365-$370 a tonne from $365-$380 last Wednesday. The Agriculture Ministry said it would seek government approval for interest-free loans to help businesses stockpile 2 million tonnes of summer-autumn paddy through September to prevent a drop in prices.