Vietnamese rice prices firm, Thai prices held steady

The prospect of purchases by Indonesia later this year supported Vietnamese rice prices this week while prices in Thailand held steady at relatively high levels despite thin demand, propped up by speculation about intervention by the incoming government.
Although the main Vietnamese crop is reaching its peak, the 5 percent broken white rice touched $510-$515 a tonne, free on board, up from $505-$510 last week, traders said on Wednesday. The 25 percent broken rice rose to $465-$475 a tonne from $460. The benchmark 100 percent B grade Thai white rice was offered steady at $550 per tonne.
"Demand from major buyers such as Indonesia could be behind this price rise as farmers and buying agents have been holding back grain and it's been difficult to buy rice, even now, when the harvest is well under way," a Ho Chi Minh City exporter said. Indonesia's government plans to import rice for delivery in September or October to maintain stockpiles of the staple and hold down prices at a time when inflation tends to pick up. Mekong Delta farmers have so far harvested 37 percent of the summer-autumn crop, the Agriculture Ministry said, and the harvesting would end next month before seasonal floods arrive on the Mekong River.
Output was estimated at around 8.37 million tonnes of paddy, up nearly 5 percent from 2010. The Vietnam Food Association said Vietnam had exported 4.14 million tonnes of rice this year as of July 14, up around 15 percent from the same period last year. Vietnam, the world's second biggest exporter, is on track to export a record high volume of 7.0-7.4 million tonnes this year, based on industry and government projections. In Thailand, the world's biggest exporter, rice prices were steady at relatively high levels despite thin demand as domestic supply was tight due to speculative hoarding by local traders, expecting aggressive intervention by the next government to support farmers.
"The new government has not said yet how and when it would implement the price-supporting scheme. However, local traders still continued to stock up on rice, resulting in tight supply in the domestic market," said a Bangkok-based trader. The Puea Thai Party won the election on July 3 and is expected to lead the next government, which should be in place by mid-August.
Puea Thai has promised to reinstate a price intervention scheme and buy paddy directly from farmers at 15,000 baht ($500) per tonne, which is more than double the current market price of 7,000 baht. "Uncertainty on how and when the intervention will be implemented has forced buyers to stay on the sidelines, waiting for clearer direction," another trader said.