Asian rice prices are expected to rise about 4 percent by the end of 2011, supported by government intervention in Thailand, but trading is likely to be thin as buyers have already sealed deals for year-end demand, a Reuters poll showed on Monday.
The benchmark 100 percent B grade Thai white rice was forecast at $642.5 per tonne by the end of this year, according to a median forecast by 10 analysts and traders.That is slightly higher than the current price of $620 a tonne, but still well below a record high of $1,080 per tonne touched in April 2008.
"The market is likely to be thin during the year-end period as most buyers had already sealed deals, waiting for deliveries during the year-end period," said a Bangkok-based trader.Firmness in rice prices during the last quarter of this year is largely being supported by expectations that the Thai government will accelerate its rice buying scheme to help support farmers after a severe flood.
"That could push rice prices in other countries to rise in the same direction as exporters could offer high prices, but slightly lower than Thai grades in a bid to attract buyers," said Kiattisak Kallayasirivat of Novel Agritrade.
Traders said rice prices could stay at high levels in general, with the 5 percent broken grade white rice expected to stay around $550-$580 per tonne by the end of the year.
The 25 percent broken grade white rice was likely to stay around $450-$500 per tonne, according to the poll.
The Thai government started buying rice from farmers at 15,000 baht ($480) per tonne from October 7, which was nearly double the market price of around 8,000 baht at the time.
It has bought around 1 million tonnes of paddy from farmers so far and the intervention has already pushed market prices up, to around 10,0000 baht per tonne on Monday.Thai exports fell significantly in October when floods cut transport routes, with loading volumes dropping to 628,000 tonnes from 890,000 tonnes a year ago, Ministry of Commerce data showed.
CHEAPER RICE FROM INDIA Traders said with high uncompetitive prices being offered by Thailand and Vietnam, top two exporters of rice, buyers were likely to turn to India which was willing to sell the grain cheaper as it is sitting on a huge stock ahead of a bumper crop.
Vietnamese 5 percent broken grade white rice was offered at a $555-$565 per tonne on Monday, but still well below the same grade of Thai origin that was offered at $580 per tonne.
Indian rice has been offered at around $470 per tonne since the country lifted a ban on shipments in September and allowed overseas sales of 2 million tonnes of common rice.
"Today, Thai and Vietnamese prices are paper prices, while Indian prices are traded values that are much lower than these competing origins," said Tajinder Narang, advisor to a Delhi-based trading company Emmsons International.
However, traders expect India to sell as much as 4 million tonnes due to its huge stocks.
India, the world's second biggest rice producer, had 20.3 million tonnes of government rice stocks as of October 1 against a target of 5.2 million tonnes.
India was also expected to have another good 2011/12 crop year with an estimated production of around 87.1 million tonnes, up from 80.65 million tonnes in the previous year, according to its farm ministry's data.
Indian rice is expected to be offered at prices ranging from $450-$485 per tonne, levels that give better profit but are still competitive compared to Thai and Vietnamese prices, traders said.
"It's like Thailand and Vietnam have made room for India to make profits," Kiattisak said.
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