Thin demand keeps rice prices low in Asia

Thin buying demand kept Asian grain markets slow this week, with prices unchanged in Thailand and softening slightly in Vietnam where a major harvest was at its peak, traders said on Wednesday. Weak demand, partly due to rising output in major buyer nations and also due in part to competition from cheaper grain in India and Pakistan, could send Vietnam's rice exports down nearly 14 percent this year to 6.1 million tonnes.
"The market has been slowing down for several weeks," a rice trader in Thailand said. "Domestic rice mills prefer to sell to the government to get the high pledging prices." The Thai government has extended a subsidy scheme to the end of June, paying 15,000 baht ($485) per tonne of paddy to support farmers, well above the market price of about 9,000 baht per tonne.
Thai benchmark 100 percent B grade white rice stood nearly unchanged at $550 per tonne, free-on-board basis, and 5 percent broken grain was also unchanged at $495 per tonne. "Export markets are still weak due to high Thai rice prices compared to competitors," the trader said. In Vietnam, the world's second-largest exporter after Thailand, prices only regained slightly after a fall since the weekend as supplies were adequate, traders said.
"Rice prices dropped during the holiday, as the ongoing harvest delivered huge volume while trading stopped, but they regained a bit after the market reopened," a trader in Ho Chi Minh City said. Vietnam's markets were closed on Monday for a public holiday, and the 5-percent broken grain fell to $425 a tonne, FOB, from $435-$445 last week. The variety rebounded to $430-$435 a tonne on Wednesday.
HARVEST PEAKED Farmers have harvested 6.27 million tonnes of paddy from 950,000 hectares (2.35 million acres), or 60 percent of the total area planted under the winter-spring crop in the Mekong Delta food basket, a Vietnam Food Association report said. The crop is expected to produce 10.3 million tonnes of paddy, the association said. Harvesting ends in late April.
Traders said slower loading of rice to China due to a shortage of containers had contributed to softening prices. Grade 1 rice, used for processing the 5 percent broken export grade, dropped 2.4 percent in the past week to an average 7.05 million dong ($339) a tonne on Wednesday in the Mekong Delta province of An Giang. "Rice companies are preparing for loading to the Philippines, but it does not help prices," a dealer said.
Rice export firms already have stocks as they have been buying grain since March 15 under an industry plan to stockpile an equivalent 1 million tonnes of milled rice for three months to boost prices at the harvest peak. Last week traders said Vietnam's supply of 500,000 tonnes of rice to the Philippines could lift prices if loadings set to start this month coincide with shipments to other destinations. "Prices are already at a bottom now and there is little possibility that prices could go anywhere further," the first trader said, signalling that foreign trading firms may start looking to buy Vietnamese grain in coming weeks.