BANGKOK: Asian rice prices will likely rise this month as supply continues being squeezed in Thailand, the world's largest exporter, though sales by India and Pakistan will cap gains, trading executives said, according to a media report.
Keeping a pre-election promise, Thai government is buying unmilled rice, or paddy from growers at THB15000 a metric ton, while market price is THB10,000 a ton or lower.
Thai rice prices rose by around $20 per ton so far this month because the government's price has now become a benchmark, said Chookiat Ophaswongse, Honorary President, Thai Rice Exporters Association.
Thai 5 per cent broken white rice is now being offered at around $615 per ton, free-on-board and 25 per cent broken at $580 per ton.
Vietnamese rice grades are mostly between $500 to $550 per ton FOB.
However, there aren't many buyers at the current price levels.
Due to floods and high prices, hardly any fresh sales are taking place, said Christophe Cousin, managing director Prasert & Sons, a Thailand based rice brokerage.
Thai rice exports are likely to fall to 500,000 tons or lower this month compared with 628,000 tons in October and an average 1.0 million tons each month during the first half of 2011.
Some of this shortfall in Thai supply is being met by sales from India and Pakistan, where export cargoes are cheaper by as much as $200 per ton, on FOB basis.
Last week, Indonesia, world's largest rice importer, purchased 250,000 tons from private Indian companies at $483 per ton cost and freight.
This marks a paradigm shift in Indonesia's rice import strategy and also shows pragmatism, because Thai and Vietnam rice is costlier, a Singapore-based exporter said.
If quality is found acceptable, it may open the door for Indian rice in Jakarta permanently, another trader said.
India contracted sales of more than 1.0 million tons ordinary, or non-Basmati rice since allowing shipments in September.
Analysts say India has limited infrastructure and it is difficult for monthly exports to exceed 500,000 tons.
India's 5 per cent and 25 per cent broken white rice is being offered around $440 per ton and $385 per ton FOB.
Prices have already bottomed out and further downward correction is unlikely.
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