Price for rice shoots up as drought hits other states

Economy July 21, 2014 00:00


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THE PRICE of Thai rice is expected to climb steadily in the next few months, mainly due to the appreciation of the baht, the government’s suspension of its rice releases during its inventory audit and concern over drought in many countries.

Thailand has a strong possibility of returning to its status as the world’s largest rice exporter this year after its export volume in the first half of the year surpassed India’s.

According to the Thai Rice Exporters Association, Thai rice shipments abroad reached 5.2 million tonnes, compared with India’s 4.5 million tonnes and Vietnam’s 3.2 million tonnes.

The association believes Thailand could export up to 9 million tonnes of rice this year.

From July 9-16, the price of 100-per-cent grade B Thai white rice went up from US$432 per tonne to $443. The price of benchmark 5-per-cent Thai white rice rose from $410 per tonne to $427, compared to $410 for Vietnamese rice.

The price of jasmine rice from the 2013/14 harvest increased from $1,052 per tonne to $1,073. The price of parboiled rice rose from $435 per tonne to $449.

The sharp rise within a week was due mainly to the stronger baht, increase in the domestic price during the off-harvest season and suspended sales by the government, said Chookiat Ophaswongse, honorary president of the association.

The baht has strengthened from 32.4 against the US dollar to 31.90 within a week. This caused the price of Thai rice in dollars to rise.

The price of Thai rice would tend to rise slightly in the next few months because the market is closely monitoring whether the Thai government would soon start selling rice from its stocks again.

Pramoth Vanichanont, an adviser to both the chamber’s rice strategy working committee and the Thai Rice Farmers Association, sees the price of Thai rice heading up in the next few months due to pressure from domestic prices.

In the past week, paddy white rice jumped from Bt7,000 to Bt8,500 a tonne, and it could hit Bt9,000 soon, he said.

“The rising drought problem in many countries will increase demand for rice imports in many countries. India could slow down its rice exports this year as it is also worried about the drought crisis, which could encourage Thailand to export more rice, as stocks are high this year,” he said. The price of Thai rice is expected to increase $10-15 per tonne in the next few months while the market waits for the government to reduce its stored rice.

Duangporn Rodphaya, acting director-general of the Foreign Trade Department, said the government is considering selling some rice soon instead of waiting for the completion of warehouse inspections.The government plans to sell rice using many methods such as opening bidding for general traders, selling on the futures market and clinching government-to-government contracts, she said.