Asia Rice-Govt intervention helps, but Vietnamese prices slip

Asian rice prices were unchanged to slightly lower in thin trade on Wednesday, supported to some extent by intervention by the top two exporting countries but under pressure from weak demand, exporters said. The benchmark 100 percent B grade white rice in top exporter Thailand was steady at $530 per tonne. "The market is very quiet. I'm only selling a few containers of premium-grade fragrant rice to a traditional client in the Middle East," one exporter said. Despite new supply from the current harvest, domestic Thai prices were also unchanged, with milled white rice being sold by millers at 14,000 baht ($428) per tonne, supported by the latest government intervention programme aimed at helping farmers. The government started buying paddy direct from farmers on Feb. 26, at 10,000 baht ($306) per tonne. This will be added to government stocks, although they are already bursting with 6 million tonnes bought in previous intervention programmes, which the government has been trying unsuccessfully to sell. It has now said it will not release any rice from the stocks over the next few months to avoid adding to downward pressure on prices as supply peaks in April, when the second crop will have been harvested. Thailand is expected to produce around 7 million tonnes from the second crop. In Vietnam, the second-biggest rice exporter, prices continued to slip due to the major harvest peaking in two weeks, traders said. Domestic rice prices in Vietnam fell to 3,600-4,500 dong (18.9-23.6 U.S. cents) per kg this week from 3,800-4,500 dong last Wednesday. Based on local prices, indicative export prices of the 5 percent broken rice dropped to a range of $360-$390 a tonne, free on board, from $370-$430 last week. But exporters said they could not sell below the $440-a-tonne floor set by the Vietnam Food Association. "We are not making any moves now, given the floor," said a rice exporter based in the Mekong Delta province of An Giang. Another exporter in Ho Chi Minh City said domestic prices were easing because buying for the government's stockpiling scheme was going slowly due to a lack of funding. "Companies do not have funds ready so they rely on banks, but banks are disbursing money slowly," he said, adding that farmers were refusing to sell because of low prices. The central bank asked banks last week to prepare funds to help rice companies build up stockpiles, but at the same time it wants to restrict credit growth this year to 25 percent from 38 percent in 2009 to prevent the return of high inflation. However, the Vietnam Food Association said exporters had already bought 500,000 tonnes of husked rice, half of the volume targeted for March and April. Traders said they had seen little impact from the stockpiling plan as the 1 million tonnes, equivalent to 2 million tonnes of unhusked rice, made up just 20 percent of the winter-spring crop. ($1=19,060 dong) ($1=32.68 Baht)