Rice bids below ministry's 'floor prices'

Economy August 08, 2014 01:00

By Petchanet Pratruangkrai
The N

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Scores of traders queued at the Commerce Ministry yesterday to join the first rice auction of the year, but bid below the ministry's "floor prices" despite high demand during the off season and amid transparency in the bidding process.

The working committee will need to ask the bidders who offered the highest prices to raise their prices and will propose the results of the auction to the Rice Policy Committee to decide whether to sell this lot of rice or cancel the sale,” said Duangporn Rodphaya, director-general of the Foreign Trade Department.

Of the 49 traders applying, 46 passed the ministry’s qualifications for participating in the auction. Exporters, packers, millers and others bid for 167,000 tonnes of various kinds of rice from the past three harvest seasons.
The working committee did not expect the bids to be lower than floor prices, so it may need to ask for a mandate from the chairman of the Rice Policy Committee to adjust some floor prices in order to release rice from the government’s stocks.
If the prices are not satisfactory, the government will not be in a hurry to sell rice from its inventory, as pressure to do so has lessened because of a low supply in the market.
The ministry says it is still confident it can reduce rice stockpiles and will continue holding auctions. It will give the result of this auction to the vice chairman of the Rice Policy Committee today. Charoen Laothammatas, president of the Thai Rice Exporters Association, said many traders joined the government’s auction because demand was high in the market. He said the bids were quite high and the government should agree to sell rice to increase supply.
The market price for rice is rising gradually because of low supply in the world market.
Chookiat Ophaswongse,  honorary president of the association, said it was a good time to release rice from the stockpiles, but the government might have to accept low prices as some stocks had deteriorated in quality.
For this round, many traders were willing to join because it was transparent and open to small outfits. It is hard for traders to conspire on bid rigging because of the high demand in the market, Chookiat said.
A rice-miller source said the bids were quite high. Small traders may be unable to compete with large players, but they had to join the auction because of the shortage of rice in the market.