Indonesia, Nigeria Demand Stoke High Thai Rice Prices
Bangkok. Fresh demand from Nigeria and speculation about aggressive government intervention pushed Thai rice to 1-1/2 year highs this week, while Vietnamese prices began to ease as well-stocked buyers stayed on the sidelines, traders said on Wednesday.
The benchmark 100 percent B grade Thai white rice RI-THWHB-P1 was at $615 a tonne, the highest since late December 2009. The benchmark hit a record high of $1,080 a tonne in April 2008.
“There was a combined 100,000 tonnes of Thai parboiled rice, waiting to be loaded for Nigeria’s orders,” said a Bangkok-based trader.
Demand for parboiled rice, which is made of the same grade paddy as white rice, helped support overall Thai prices, although overall demand remained thin.
The recent increase in demand from Indonesia – which recently a sealed a contract to buy 300,000 tonnes of 15 percent broken grade white rice from Thailand, after a deal for the same volume from Vietnam – also set Thai rice prices alight.
Senior officials from those countries tried to play down the deals in a bid to prevent regional prices from soaring. Prices have held below $600 over the past year, helped by ample supply that has shielded Asia’s main staple from price surges that have hit other grains.
The uptrend in rice prices would feed food inflation worries amid the slowing global economy, stirring fears of a repeat of the 2007/08 food crisis that led to riots in some developing nations.
Thailand, the world’s biggest rice exporter, was expected to ship a record of 10 million tonnes this year. However, its annual exports could fall sharply next year if the government implements its aggressive intervention scheme, which could push prices to uncompetitively high levels.
Traders said prices were expected to be pegged at firm levels for weeks, supported by political speculation that the Thai government would intervene on rice prices aggressively.
The Puea Thai-led government, which took power officially earlier this month, promised to buy rice from farmers at 15,000 baht per tonne, double the current market prices of around 8,000 per tonne.
That encouraged local traders to hoard rice with the intention of reselling to the government when the intervention plan is implemented in November, causing tight domestic supply and pushing prices higher.