Traders opposed to government's rice-bidding

Rice exporters and millers shared identical views that now was not the right time to release huge rice stockpiles into the market, when there was a slowdown in demand. They said it would cause rice prices to drop.

Their comments came following reports the government was considering opening bidding for a million tonnes of white rice to rice traders soon, including millers, exporters and government-to-government (G-to-G) contracts.

Prime Minister Samak Sundaravej tomorrow will hold a meeting with all concerned agencies under the National Rice Policy. It is expected to discuss bidding for rice in the government's stocks.

Thai Rice Exporters Association president Chookiat Ophaswongse said if the government decided to release huge rice stocks, rice prices would drop significantly and hurt Thai rice traders.

At the moment, many negative factors are responsible for the falling prices. Vietnam announced it would export 5 million tonnes of rice this year. Prices of other cereal grains have also decreased due to flourishing stocks, and buyers have slowed down fresh orders as they are overstocked.

The association said rice prices had dropped gradually an average of Bt200 to Bt300 per tonne a day since last month. As of last Wednesday, the price of jasmine rice had fallen from US$1,085 (Bt36,500) per tonne to $1,057 in only a week. Regular white rice fell from $862 a tonne to $849.

"The government should wait until rice price increase, so they can release rice under the bidding," said Chookiat, adding that the government should release smaller stocks, such as 200,000 tonnes, for each bidding, to ensure a small impact on the market.

Thai Rice Millers Association president Vattana Rattanawong said rice prices would continue to drop if the government decided to release big lots of rice into the market.

If the government really wants to release rice from the stockpiles in order to clear up the warehouses for new pledging programme, he suggested it trade rice under G-to-G contracts, to ensure a higher rice supply will not harm market mechanisms.

Meanwhile, Deputy Commerce Minister Wiroon Techapaiboon said the government had received many rice orders under G-to-G contracts.

The World Food Programme had contracted to buy 60,000 tonnes of low-priced rice, to help survivors of Cyclone Nargis in Burma. A private Liberian company had also ordered 20,000 tonnes.

The government did not expect the bidding to harm the market much, as the stock would be distributed to a variety of groups of traders, including for G-to-G contracts, he said.