Asian rice prices stay high despite thin trade

The prospect of a drop in supply due to severe flooding in Thailand, the world's biggest rice exporter, helped support Asian rice prices this week although there were few buyers, except perhaps in India, traders said on Wednesday. The benchmark 100 percent B grade Thai white rice was offered at $630 per tonne, unchanged from last week.
"That's simply an offer price based on our costs, which have gone up due to the floods, but there's no one who wants to buy at that price," said a Bangkok-based trader. Thailand's worst floods in 50 years have disrupted transportation, forcing exporters to delay shipments. Some may even have to declare force majeure if the situation gets worse.
The floods have damaged up to 6 million tonnes of paddy, cutting forecasts for the main crop currently being harvested to 19 million tonnes from 25 million. "After the flood, prices may even rise further because of the drop in projected supply, and the government will be buying rice aggressively under its intervention scheme to support farmers," said Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association.
The government, in power since August, started its rice-buying scheme on October 7 but it has been interrupted by the flooding. It is offering to buy unmilled rice at 15,000 baht ($485) a tonne. Traders have said that would push the export price up to $850 a tonne, taking into account their costs. That compares with around $530 at the end of June, before the government was elected and $550 at the end of last year. The price hit a record high of $1,080 a tonne in April 2008, when fears about food security pushed demand up around the world.
VIETNAMESE PRICES UP Prices in Vietnam, the second-biggest exporter, have been pulled up by the events in Thailand but trading was thin there too due to low stocks, traders said. Vietnam's 5 percent broken rice stood at $575 a tonne, free on board Saigon Port, against last week's $570-$580. The 25 percent broken rice stood at $545 a tonne against $545-$550 a week ago .
"There are no commercial deals because Vietnamese prices are too high," one exporter said, adding that buyers were looking at cheaper origins such as India. Indonesia's state procurement agency, Bulog, said on Wednesday it was in talks with Indian industry and government officials over the possible purchase of 500,000 tonnes to be supplied until February 2012.
The Indian government, which had banned exports for almost four years, authorised shipments of up to 2 million tonnes of non-basmati rice from September. Traders said Indian grain was offered at $460-$470 a tonne, well below both Thai and Vietnamese prices.