Asia rice: Thai rice export prices rise as drought triggers future supply concerns

Thailand's rice export prices rose this week on concerns that a drought hitting the country may harm future supplies of the crop, while the festive season led to thin trade in India and Vietnam.

Thailand's benchmark 5 percent broken rice prices were quoted at $424-$435 on Thursday, an increase from $395-$420 the week before.

"There are concerns that the ongoing drought could hurt future supply so there is speculative buying and stockpiling by some mills and exporters, which has driven up the prices," a Bangkok-based rice trader said.

The government introduced emergency measures last week in 11 provinces around the country, many of them rice-growing areas.

Thailand, the world's second-largest rice exporter, will not have enough water to grow the crop in some 960,000 hectares of rice fields around the Chao Phraya River basin, authorities said in early November.

The dry season is expected to last through to April 30 next year. Rice export rates notched up in Vietnam as well, with 5 percent broken rice quoted at $355-$360 a tonne, slightly higher from last week's $350-$352. "The market is just quiet during this Christmas and New Year holiday," said a trader based in Ho Chi Minh City. "I think it won't pick up until at least February, when supply of the winter-spring crop is available." Despite domestic inventory being nearly empty, prices would likely not go up in the short term due to weak demand, another trader based in the Mekong Delta province of An Giang said.

In top exporter India, weak demand amid a rise in paddy rates in the local market kept export prices steady.

The 5 percent broken parboiled variety was quoted around $360-$365 per tonne.

"Most of the traders are on Christmas vacation. Demand is negligible," said an exporter based at Kakinada in the southern state of Andhra Pradesh.

New Delhi earlier this year raised paddy rice purchase price by 3.7% to 1,815 rupees per 100 kg for the 2019/20 crop.

Meanwhile, Bangladesh has failed to secure any overseas deals since a long-standing export ban on common variety was lifted in May, with its rice more expensive than supplies from India or Thailand.

"There is no good news. We are still looking for a market to export common rice variety," a Dhaka-based trader told Reuters.

"We could fetch some deals on aromatic rice. But for common variety of parboiled rice, we can offer at least $500 per tonne while our competitors can offer much lower rates."