Thailand may release some of 2mn tonnes rice stocks

"We have around 2 million tonnes of milled rice in stocks, ready to be sold at any time if there is any tightness in the domestic market. However, we don't see any shortage at this moment," said Anukul Tamprasit, president of the Public Warehouse Organisation (PWO).

The PWO, which comes under the Commerce Ministry, manages government rice stocks. Anukul said stocks had risen to 2 million tonnes from 1 million early in 2011.

The Puea Thai party, which won a majority in parliament in the July 3 general election, has promised to reinstate a rice-buying scheme to support farmers.

The price it has promised, 15,000 baht ($504) per tonne for unmilled rice, is way above the current market price of around 8,000 baht, which has encouraged millers and local traders to hoard grain so they can sell at a profit when the new policy comes in.

Domestic rice prices have jumped amid signs of panic buying by consumers in Bangkok. Some supermarkets limited purchases for a few days recently until the Commerce Ministry came out and said there was plenty available.

Even so, milled rice has jumped to 15,000 baht per tonne, up 15 percent from the 13,000 baht offered before the election.

The outgoing government introduced a new price scheme last year, offering to pay farmers the difference if they had to sell below a guaranteed level, currently 11,000 baht per tonne.

However, farmers found the new scheme cumbersome and, faced with protests, the government brought back old-style rice-buying, running the two intervention schemes side by side.

Traders said they did not expect to see any rice shortage over the next few weeks as the harvesting of another off-season crop is due late next month or in September, with around 2 million tonnes expected.

In addition, some hoarders may need to sell soon.

Stockpiling huge amounts of rice has caused a liquidity crunch for some millers. The new government is not due to be formed until mid-August and it is unclear when its new intervention policy will be implemented.

It may not start until the next main harvest from late October.

"Most local millers and traders don't have strong financial support. You can see that some of them need to release stocks in order to get money to run their business," said a trader in Ayuthaya province, a major rice-growing province.

Thailand, the world's biggest rice exporter, produces around 30 million tonnes of paddy rice a year. It aims to export 9.5 million tonnes of milled rice this year, up from 9.0 million in 2010.

Copyright Reuters, 2011