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The latest bidding for one million tonnes of rice is likely to be cancelled as the offered prices have burdened the government with a loss of at least Bt3 billion.

Democrat Bangkok MP and the party's deputy spokesman, Atthawit Suwannapakdee, urged the Commerce Ministry to cancel the auction as the selling prices are much lower than the current market price.

"The ministry must carefully consider the approval, whether it had created losses for the government or not," said Siripol Yodmuangcharoen, permanent secretary of the ministry.

Although 16 bidders won the auction, the ministry has not yet signed contracts with those exporters and millers. Last week, caretaker Commerce Minister Chaiya Sasomsap had approved the release of one million tonnes of rice from the warehouses in his last major act at the ministry.

The ministry claimed that it could generate an extra Bt1.9 billion by bargaining with all 16 winners, who had offered Bt10.7 billion for the whole lot. The bargaining is expected to bring the government revenue up to Bt12.63 billion in total.

However, it was found that the selling prices approved for the auction for a total of 914,850 tonnes of white rice and 191,977 tonnes of fragrant rice (Pathumthani rice) were much lower than the current market prices.

Its winning bid was between Bt14,000 and Bt16, 550 per tonne, while the export market price for 5 per cent second crop white rice is quoted at US$569 per tonne (Bt18,000-Bt20,000). The winning bid for fragrant rice was between Bt15,000 to Bt18,000 per tonne, while the market price for fragrant rice is quoted at $714-$816 per tonne (Bt24,200-Bt27,700).

A senior official at the ministry said it was a wrong decision to sell rice at these low prices.

"The government should reconsider the tender and cancel the bidding result as the market prices are higher than the selling prices. The selling prices have not covered the costs of the government, which purchased rice from farmers at Bt14,000 per tonne," the source said. Moreover, there are additional expenses the government incurred on polishing, stocking, and transportation, the source added.

In addition, the Foreign Trade Department has forecast that Thailand will export only 8.5 million to 9.5 million tonnes of rice next year, down from 10 million tonnes projected for this year.

The department's director-general, Apiradi Tantraporn, said the rice price next year is likely to drop following increase in stockpiles in every country and sluggish rice trading in the world market due to the global economic slowdown.

According to the United Nations Food and Agriculture Organisation, world rice trade is expected to drop 2.8 per cent next year, from 29.07 million tonnes this year to 28.25 million tonnes, the lowest trading volume since 2005.