Thai rice prices jumped 3.7 percent this week, fuelled by a stronger baht, while India and Vietnam continued to cut prices to lure buyers amid thin demand, traders said on Wednesday. The baht hit its strongest level on Tuesday since the 1997 Asian financial crisis, boosted by sustained foreign inflows. With a gain of 4.3 percent against the dollar, it is Asia's best performing currency this year.
The price of 5 percent broken grade Thai rice rose to $565 per tonne, up from last week's $545. "The baht is very strong and I think prices could rise even higher, as the intervention is still going on," said a Bangkok-based trader. Thai rice prices are being supported by a state rice buying scheme, in which the government pays farmers 15,000 baht ($510) per tonne of paddy, a level that has pegged export-grade milled rice prices at $550 to $570 per tonne.
Thailand's uncompetitive prices are unlikely to win it deals at an Iraqi tender issued last week for 30,000 tonnes of rice from origins such as the United States, Uruguay, Thailand and Argentina. "It is very difficult to win the tender as our prices are around $10 dollar per tonne higher than the others," said a trader close to the tender process who asked not to be named.
Offers at the tender ranged between $545 and $549 per tonne, he said, while the Thai offer was at $560 per tonne. In contrast, Vietnamese rice prices were barely changed, staying at competitive levels amid the possibility the Philippines may return to buy a small volume, traders said. The 5-percent broken rice narrowed to $405 to $410 a tonne, free-on-board basis, from $400 to $410 last Wednesday.
The lower quality 25-percent broken rice edged up to $380 a tonne on FOB basis, from $370 a week ago. The Philippines will import 187,000 tonnes of rice this year from either Vietnam or Thailand and will seek bids in the second quarter, before ending imports of the grain in 2014. "There are no talks and no delegation's going there (Manila) yet but prices have gained a bit," a trader in Ho Chi Minh City said. In India, the world's second biggest rice producer, prices were even lower than in Vietnam and unchanged from last week, traders said.
Indian common grade rice varieties were quoted at $390 to $450 per tonne, they said. "Export demand continued to be mute," said a Delhi-based trader. India has decided to keep its unrestricted export policy for the third year in a row to get rid of surplus stocks. By March 1, India's rice stocks in government warehouses were 35.8 million tonnes, or just over three times its target of 11.8 million tonnes.