Thailand Rice Price - Weekly

Despite a strengthening Thai baht to 32.5 baht/$ from last week’s 32.7 baht/$, export prices declined by 1-2 percent due to quiet foreign demand. Foreign buyers are reportedly buying cheaper Vietnamese rice, with a price difference of over $100/MT. Also, some buyers are reluctant to conclude deals due to concerns of surging freight costs, which have doubled from the previous year. This week the government implemented the direct purchase program which enables farmers to sell paddy at benchmark prices. However, the program got off to a slow start as few millers have shown interest in program participation due to the unattractive terms and conditions, compared to those of the mortgage scheme. Only 1,500 tons of white rice paddy were bought this week out of a program allowance of 1.9 million tons and a credit line of 20 billion baht ($615 million). Yet, the program had a psychological impact on the market as it helped decelerate the reduction in domestic prices. The biweekly benchmark prices of MY2009/10 second-crop white rice for March 1-15, 2010 were lower than the previous period. However, market prices of paddy are much lower than current benchmark prices, as increasing supplies from off-season crops adds daily downward pressure on prices which the lagging benchmark price is unable to account for.