Rice prices fall as traders delay buying from farmers

The Commerce Ministry is expected to announce tomorrow the release of 300,000 tonnes of government rice for bidding.

A trader source said yesterday that the prospect of a large |volume of government rice entering the market had caused prices to fall dramatically in the past few days.

"Although there is high demand for rice in the world market, |the government's plan to release part of its stockpiles has caused price weakening," the source |said.

The government has about 6 million tonnes of rice stored.

Yesterday, 5-per-cent white rice was quoted at Bt16,800-Bt17,000 a tonne, down from Bt17,500-Bt17,800 last week, while 100-per-cent white rice was traded at Bt20,500, dropping from Bt22,000. Husked rice was selling for Bt12,000-Bt12,200, falling from Bt13,000.

"Rice exporters have delayed buying from millers as they want to see the price come down. Although prices should be rising, following high demand in the market, exporters' strategy to delay buying rice at present has caused the price to decline," the source said.

The source also said the upcoming sale of government rice could pave the way for corruption.

The ministry is planning to sell rice at Bt16,000 a tonne to traders. It has also offered traders to pay tea money of Bt500 a tonne if they want to secure some of that cheap rice, the source claimed.

"If the government decides |to sell rice at only Bt16,000 a tonne, it would face a loss of Bt6,000 a tonne, as its production cost is Bt22,000 a tonne," the source said.

The ministry's plan is to sell about 600,000 tonnes this month, which means it would suffer an immediate loss of Bt3.6 billion if the price were Bt16,000.

The source said an unscrupulous staff member who works close to Commerce Minister Porntiva Nakasai might be involved with the case.

To prevent a severe drop in rice prices, the ministry should delay sales to next month, the source said, adding, "It would be better if the government released its huge rice stockpiles at the end of the harvest season to ensure stable prices."

If the government sells rice, holding an auction is the last choice, as it would upset the market, the source said.

It should instead concentrate on seeking government-to-government deals, as that would not drive the market price lower.