Thailand rice update

Despite a retender of government stocks (282,802 tons of white rice and 9,420 tons of fragrant rice) on September 7, domestic and export prices increased significantly by 5-9 percent, particularly for white rice and parboiled rice. A sharp increase in prices reflected last week's unexpected government approval to extend the MY2008/09 second-crop intervention program (mortgage scheme) to the end of September for a total of 6.0 million tons of paddy. The Government undertook this action due to price declines during the month of August after the program ended on July 31. Intervention prices remained unchanged at 10,800 – 12,000 baht/ton ($309 - $343) for white rice paddy, which are approximately 30 percent higher than market prices.
The expansion of the mortgage scheme toward the end of off-season crops has resulted in limited availability of supplies of white rice paddy for parboiled rice production. As a result, exporters are struggling to secure parboiled rice to fulfill contracts, particularly to African countries, which ought to be delivered no later than November.
The Government will implement the rice price insurance scheme on October 1, 2009 with a budget of 25 billion baht ($735 million). Insured prices have been finalized at 10,000 baht/ton ($296/MT) for white rice paddy, 15,300 baht/ton ($453/MT) for fragrant rice paddy, 14,300 baht/ton ($393/MT) for provincial fragrant rice paddy, and 9,500 baht/ton ($281/MT) for glutinous paddy. However, the eligible tonnage has not been finalized but is expected to be 20 tons/farmer. The compensation will be based on the difference between insured prices and the benchmark prices that will be derived from market prices. The formula for the calculation of benchmark prices will likely be finalized in the coming weeks.