Fresh demand from the Middle East, Africa and Bangladesh has lifted Asian rice prices this week but the increase may not stick because supply is rising in the world's top two exporters, Thailand and Vietnam, traders said on Wednesday. The benchmark 100 percent B grade Thai white rice was offered at $520 per tonne, up from $500 last week, exporters said on Wednesday.
The 5 percent broken grade white rice rose to $497 per tonne from $480. "Domestic prices were also higher as exporters started buying rice for deliveries," one exporters said. Domestic milled rice rose to 14,000 baht ($462) per tonne from last week's 13,000 baht, exporters said.
Iraq has bought 132,000 tonnes of Thai and Uruguayan rice to bolster food ration supplies, according to the Iraqi Grain Board. Bangladesh could also buy from Thailand as the lowest offered price in a Bangladeshi tender to buy 50,000 tonnes of non-basmati parboiled rice came in at $509 a tonne including cost and freight from Thailand's Phoenix Commodities.
However, supply is rising in Thailand, the world's biggest rice exporter, which is harvesting its second-biggest crop of the year. The Agriculture Ministry has forecast record output this year of 9 million tonnes of paddy, up from the 7 million the country normally produces. Harvesting is expected to peak in mid-July, traders said.
By then, the market may be affected by political developments after a general election on July 3. One of the parties with a good chance of heading the next government has promised to buy rice from farmers at 15,000 baht a tonne, around 80 percent about the current market level.
That would push up export prices and, given Thailand's market dominance, prices elsewhere may rise, too, although not to the record levels seen in 2008, analysts said. One result could be a collapse in Thai rice exports as Vietnam, the second-biggest exporter, undercuts Thai prices and eats further into its market share.
In Vietnam this week, prices also edged up because of expected new demand, but the rise may be short-lived here, too, as the harvesting season is about to peak in coming weeks. Vietnam's 5 percent broken rice rose this week to $465-$475 a tonne, free on board, from $460-$465 last week. The 25 percent broken rice widened to $425-$440 a tonne from $430.
"Buyers are returning before the harvesting accelerates, so prices are rising a bit," an exporter in Ho Chi Minh City said. Among the new demand was the sale of 10,000 tonnes of 25 percent broken rice to a European trading firm for shipment to West Africa, with loading to start from late June, a trader at a foreign company said.
"Also, buyers are in the market for fully broken rice for Senegal," he said without giving any specific details. However, the harvesting of the summer-autumn crop, the second-highest-yielding among three rice crops a year in the Mekong Delta, will peak by late June. "Prices will ease when the fresh grain arrives," another Vietnamese exporter said.
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