Thailand rice weekly report

Domestic and export prices declined by 2-3 percent due to the government's stock release and the slowdown in parboiled rice inquiries from African countries. The Government finalized its release of intervention stock of last month's tenders (Aug. 6 and 26) of 464,762 tons of which 290,543 tons are MY2008/09 fragrant rice and 174,219 tons are MY2007/08 white rice. The bidding prices were mostly below expected AFET futures prices for October – December (-2.48 baht/kg for fragrant rice and -0.50 baht/kg for white rice). Also, the September's tender (282,802 tons of white rice and 9,420 tons of fragrant rice) will likely be finalized at a discount. In addition, rice traders expect the Government to release old-crop intervention stocks of 1.0 - 2.0 million tons through regular tender in mid October. Despite a downward trend in domestic prices of white rice due to the intervention stock release and the new price insurance scheme that will replace the mortgage scheme in October, exporters remain conservative in their quotations due to concerns over the strengthening Thai baht from the current level of 33.8 baht/$ in the last quarter of this year.
Parboiled rice prices are leveling off as current shipments have been fulfilled, particularly for African countries. Also, new inquiries slowed down because most parboiled rice contracts have been fulfilled to meet seasonal demand in African countries during December. The shipments usually take a month from Thailand.
The rice price insurance scheme will begin on October 1, 2009 with a budget of 25 billion baht ($735 million). Insured prices were set 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.