rice prices to fall in next few months

Rice prices are set to fall gradually in the next few months as the government dumps huge stocks into the market through bidding, while importers are waiting for more supplies from India after it resumes exports.

Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said yesterday that Thai rice had been dropping in price this month.

"As the major rice holder, the government's plan to release a huge volume of rice, up to 3 million tonnes, has created a 'wait and see' posture in the market," he said.

Foreign importers have delayed placing orders now as they anticipate prices flagging in the near future.

India, one of Thailand's export rivals, will soon start exporting again.

Chookiat said India has more rice inventory this year due to its long suspension of rice exports.

India has about 20 million tonnes of rice in its warehouses, which should be ready for export in the middle of the year.

Normally, the country stores only 12 million tonnes of rice a year.

Thai rice prices have softened gradually from last week. As of yesterday, Thai 5-per-cent white rice was quoted at US$552 (Bt19,600) per tonne, down from $568 last week.

Jasmine rice was quoted at $887 per tonne, marginally down from $888 last week, while parboiled rice was going for $583 per tonne against $599 last week.

Rice exporters at their meeting yesterday expressed concern that the government's plan to auction off a big lot of 500,000 tonnes to only one exporter would be a big mistake, as it could lead to market dominance.

Also, the huge volume of rice released into the market would cause rice prices to fall below US$500 per tonne, Chookiat said.

The government should distribute rice in small quantities to each buyer, he said. That would not only prevent cornering of the market, but also give more chances to small and medium-sized traders to win the bidding.

On Tuesday, Commerce Minister Porntiva Nakasai said the government would open bidding for three million tonnes of rice for export early next month.

She said her ministry would only release this rice to a bidder offering to buy a big lot of not less than 500,000 tonnes.

Sombat Chalermwutinan, president of Asia Golden Rice - the country's second largest rice exporter - said the government may find difficulty in finding buyers if it sets too high a price, as Vietnamese rice is cheaper than Thai rice by $100 per tonne.

To ensure fair competitiveness for Thai rice traders and stable rice prices, the government must consider gradually releasing rice in small amounts to the market, he added.