Thai Government Re-Issues Rice Tender

After cancelling the January 21, 2010 rice tender destined for exports, the Government re-issued a tender on February 22 for March – July 2010 delivery, despite controversy among politicians, millers, and farmers on concerns that this measure
would add downward pressure to declining domestic prices. This month alone, domestic prices for 5% grade white rice have declined by 7-10 percent from levels of 17,200 baht/ton ($521/MT).

The retender will include 501,849 tons of old-crop intervention stocks from MY2007/08 – MY2008/09, of which 350,206 tons are 5% grade white rice, and 151,643 tons are Pathumthani fragrant rice for export only. Initial bidding prices are expected on February 23. Under the tender’s terms, if offers are not suitable, the Government has the right to renegotiate until it deems that a reasonable price
has been attained. As a reference point for prices, the Government will use the current market price minus an amount attributed to the stock’s “depreciation”, which shall be calculated using a pro-rata discount rate of 5– 50 percent.

It is expected that fewer exporters will participate in the tender, as many believe contracts are unlikely to be awarded. Bidding prices are expected to be lower than the Government’s reference prices (current market price minus “depreciation”).