Asian rice prices are under pressure from thin buying demand and rising supplies in the world's leading exporters of the grain, traders said on Wednesday. In Thailand, the top rice exporter, prices softened due to competition from Vietnam and rising supplies from government stock sales, traders said. "The market is quiet, and is not so good for us because Vietnam's newer supply is coming in," Kiattisak Kanlayasirivat, a director at Ascend Commodities-SA in Bangkok, told Reuters.
"It would be difficult for us to compete simply because their price is cheaper than ours." The Thai benchmark 5 percent broken grade eased to $405-$412 a tonne this week, free on board (FOB), from $413 a tonne a week earlier, while the similar grade in Vietnam stood unchanged at $355-$360 a tonne, FOB basis. The Thai government will finalise this week the results of a rice tender of 1 million tonnes from state warehouses, Commerce Minister Chatchai Sarikulya said on Tuesday.
Thai rice prices are likely to stay low due to the increased supply, with ample stocks in Africa and a weakened euro to further reduce demand from the continent, traders said. In Vietnam, the third-biggest exporter after Thailand and India, quotations of a low-quality grade recovered slightly from multi-year lows but thin buying demand before a long holiday and the peak harvest season in March curbed the rise.
The 25-percent broken rice edged up to $330-$335 a tonne FOB on Wednesday, from $320-$325 a week earlier, after hitting the lowest level since July 28, 2010 last week. The offers are for March/April loading. Last week, Vietnam's 5-percent broken rice also weakened to its lowest since September 2013, even before harvesting reaches its peak in March. "Prices have stopped falling and recovered slightly because of news about several deals, but given a holiday ahead, they will not rise further," said a trader in Ho Chi Minh City.
Malaysia has agreed to buy 240,000 tonnes of Vietnam's 5-percent broken rice for April to November delivery, traders in Vietnam said. Vietnam will close all markets between February 14 and February 23 for Tet, its biggest festival to mark the Lunar New Year. The March harvest peak of the winter-spring crop, Vietnam's biggest, could keep up the downward pressure on prices unless the country secures a large government deal, traders said.