Asian rice prices have slipped this week as demand remains thin, while supply is rising as farmers in both Thailand and Vietnam have started harvesting crops, traders said on Wednesday. The benchmark 100 percent B grade Thai white rice dropped to $590 per tonne from last week's $600 although the government has renewed its scheme to buy rice from farmers to support prices, they said.
Thailand's 5 percent broken grade has eased to $574 per tonne from $585. "There was no space left for the government to hold rice and a significant amount has spilled into the free market, so some exporters can offer at slightly lower prices," a Bangkok-based trader said.
On Tuesday, the government approved a 240 billion baht ($7.8 billion) budget to buy rice from farmers at higher-than-market prices. But ample supply from the big Asian producers, Thailand, Vietnam and India, kept prices down. "Prices are likely to be under pressure as there is plenty of rice at a time when very few buyers want to buy," said another Thai exporter.
Traders said the intervention could prevent prices from falling sharply during the harvest period, but it would not help push prices as high as the government wanted. Farmers in Thailand have started reaping rice from the main crop. The country was forecast to produce around 25 million tonnes of paddy in the 2012/13 crop.
In Vietnam, farmers in the Mekong Delta have started harvesting their third rice crop, supply of which is mainly for domestic markets but which has also helped soften export prices. Vietnam's 5 percent broken rice eased to $445 a tonne, free on board, from $450-$460 last week. The 25 percent broken rice dropped to $420 a tonne from $420-$430.
"Even at these Vietnamese prices, African buyers have yet to accept, so trading has been very quiet," a trader in Ho Chi Minh City said. Vietnam's rice exports between January and September rose 7.1 percent from a year before to an estimated 6.36 million tonnes, the government has said, putting the country on track to achieve the record high export of 7.2 million tonnes logged last year. In contrast, Thai rice exports have dropped by 44 percent so far this year to 4.9 million tonnes, versus 8.9 million tonnes in the same period last year, due to uncompetitive prices as a result of the government intervention.