'Greater interest in Thai rice stocks'

Economy May 12, 2014 00:00

By Petchanet Pratruangkrai


3,050 Viewed

More than 10 countries have shown strong interest in purchasing rice from the Thai government's stocks, following high demand because of a global drought.

"Countries from Asia, Africa and the Middle East have shown great interest in procuring rice from Thailand. If Thailand can negotiate for the best prices and finalise the deals, it should help clear out our inventory in a short time," Surasak Riangkrul, director-general of the Foreign Trade Department, said last week.

Many countries – both former buyers and new ones – have contacted the department directly, he said.

The combined quantity under discussion is about 4 million-5 million tonnes. If the deals are clinched, Thailand will have only a few million tonnes of rice remaining in its granaries. Then there would not be an urgent need to release rice.

The sales with each country could be through government-to-government contracts or through brokers, or the rice could be sold directly to private companies.

The department will negotiate based on the best price for the countries, but not below the market price. The department may give some discount for buying in bulk, but it will not sell rice at a low price in order to speed up rice releases, as that could affect the market price.

The rice price is expected to rise in the near future because many countries have suffered drought, which has lowered outputs of rice and other cereals. After the end of the rice-pledging scheme, the Thai government has no more rice entering its stocks, while large quantities of rice have been sold, so Thailand should no longer face higher pressure to release rice, he said.

The department plans to continue selling about 800,000 to one million tonnes of rice from stockpiles this year. On Wednesday, it will open bidding for 450,000 tonnes of rice.

9m tonnes still in govt storage

Caretaker Commerce Minister Niwattumrong Boonsongpaisan has said before that Thailand had about 19 million tonnes of milled rice in storage after the pledging scheme ended in February.

Of that, six million tonnes have been sold and 3.5 million tonnes are husked rice, so there are still about 9 million tonnes of milled rice in government warehouses.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said global rice trading is not currently active, as many countries already have some stocks. Not many traders would join the upcoming auction.

The government may get a low price for its rice, compared to its cost. Rice is currently quoted in the market at Bt11-Bt11.30 a kilogram.

A source from the rice trade said Thailand may fail to sell about 800,000 tonnes of rice to Malaysia. The countries are negotiating the price.

The source said Malaysia has high bargaining power as it used to purchase Thai white rice at a low price of only US$375 a tonne. The Thai government may not be able to offer a low price to serve Malaysia’s demand.