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Thai rice steadies after intervention extended
Posted by Labels: Commodities, Rice, Thailand, Vietnam
Thai rice prices were steady this week after the government extended its intervention scheme, a move that would ensure Thai rice remains uncompetitive especially as Vietnam has lowered its prices to compete better with India, traders said on Wednesday.
The Thai government has extended its intervention programme, which was due to end on February 29, to the end of June to cover the second crop.
The government will therefore continue to buy rice from farmers at 15,000 baht ($490) per tonne, well above the current market level of 9,000-10,000 baht, and keep it in stockpiles in an effort to prop up prices.
"Thai export prices will be pegged at high levels that no one wants to buy at.
And that will provide room for Vietnam and India to sell," said a Bangkok-based trader.
The price of 100 percent B grade white rice was steady at $550 per tonne, while the 5 percent broken grade white rice stood at $525-$530 a tonne, compared to last week's $530.
Traders said prices were held up simply by intervention, not through demand, as Thai exporters could not compete with rice from other countries that was around $100 per tonne cheaper.
Last week, Vietnam lowered its floor prices by 8 percent to boost exports.
Prices there dipped this week due to thin demand and increasing supplies from a major harvest, and they were likely to fall further next month, traders said.
Quotations for 5 percent broken rice eased to $430-$435 per tonne, free on board, from last week's $440-$450.
The 25 percent broken grain fell to $405 a tonne from $410-$420.
Vietnamese prices are now below Indian levels for 5 percent broken rice at around $450-$465 per tonne, said a Bangkok-based trader who deals in Indian grade.
Thailand looks set to lose its title as the world's biggest rice exporter to Vietnam because its uncompetitive prices, caused by the intervention, are sharply cutting exports.
Shipments in January dropped to 350,000 tonnes, down 52 percent from a year earlier when it exported 730,000 tonnes, Commerce Ministry data showed.
"Exports are expected to fall at the same rate in February as demand remains thin," said a Thai trader.
Vietnamese prices are unlikely to fall sharply from current levels as the industry regulator, the Vietnam Food Association, could stockpile 1 million tonnes of milled rice to prop up the market during the winter-spring harvest.
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