Thai rice prices seen firm

Thai rice prices are expected to hold firm in thin trade over the next week as the market awaits a cabinet reshuffle which could result in a shift in rice policy. Thai export prices for most grades were up $5-7 a tonne on a free-on-board basis, excluding freight costs, on Thursday from a week earlier. The domestic price of 5 percent white paddy was up 4 percent at 11.20 baht a kg ($271 a tonne) from 10.80 baht quoted a week earlier.
Traders said domestic prices rose this week mainly on speculation that Wattana Muangsook would return as commerce minister after being moved to the industry portfolio in March after about 2 years at commerce.
"Exporters are expecting Wattana will become commerce minister," said one trader.
"This is a main factor moving the local price. Exporters expect if Wattana becomes a new minister, the intervention price will increase again," said another.
Wattana was also keen on keeping large government stocks to manage domestic prices, traders said.
When Wattana was commerce minister, he raised state buying prices by 1,300 baht ($31) a tonne.
The current government buying price for 5 percent white paddy grade is 6,600 baht a tonne ($160), up from 6,500 baht in October and 6,200 baht a year ago.
The price was only 5,200 baht in 2003.
Thai 100 percent grade B was offered on Thursday at $285 a tonne, FOB.
Prime Minister Thaksin Shinawatra said earlier this week he would make modest changes to the cabinet, but he did not say when.
The government is already sitting on a large stock of around 5 million tonnes of paddy, the equivalent of 3 million tonnes of milled rice, bought from farmers since November.
It also aims to buy up to 2.5 million tonnes of paddy from the smaller second crop between mid-April and mid-August.
Between January 1 and July 13, Thailand exported 3.97 million tonnes of rice, 21 percent less than the 5.02 million shipped in the same period last year.
It exported a record 10.13 million tonnes of rice last year, up from 7.58 million tonnes in 2003.
However, drought could trim exports to 7.5 million tonnes this year, or even less, exporters said.