Thailand Rice Price - Weekly

Domestic and export prices continued their downward trend. However, the strengthening Thai baht to 32.7 baht/$ from 33.0 baht/$ and last week’s tender cancellation of 501,849 tons of MY2007/08 – MY2008/09 intervention stocks prevented further price declines. The Government has suspended any plans of future stock releases due to mounting concerns of sharp reductions in domestic prices, particularly as new second-crop supplies are coming into the market. In addition, the Government will implement the direct purchase program, a measure instituted last year to stabilize domestic prices in which the Government bought white rice paddy(700 tons out of an allowance allowance of 2.0 million tons) up to the point where benchmark prices surpassed insurance prices.

This direct purchase program is being financed through the Bank for Agriculture and Agricultural Cooperatives (BAAC), which will provide a credit line of 20 billion baht ($606 million) to the Public Warehouse Organization (PWO) and the Marketing Organization for Farmers (MOF) to purchase paddy from farmers at benchmark prices. Benchmark prices of 5% grade white rice paddy are currently at 9,074 baht/ton ($275/MT).

The biweekly benchmark prices of MY2009/10 second-crop white rice for March 1-15, 2010 were lower than the previous period, as such farmers who sell in this period will receive a higher compensation. Further reduction in benchmark prices is unlikely as the government will have implemented the direct purchase program which will help stabilize domestic prices.