Thai rice prices fell 6 percent on Wednesday on thin demand after India allowed exports of another 2 million tonnes of non-basmati rice, exporters said. The benchmark 100 percent B grade white rice fell to $600 per tonne, the lowest since early August and down from last week's $640 per tonne, as buyers switch to buy from India.
"Psychologically, prices fell because of fears of cheaper rice from India that could erode our market share," one exporter said. A leading Indian trading firm sold non-basmati rice at $470 per tonne after India allowed unrestricted exports of 2 million tonnes of rice last week.
That was well below the prices of the same grade of white rice offered by Thailand and Vietnam at $545-$580 per tonne. Prices were expected to ease further over coming weeks as more buyers could turn to buy from India. However, traders said they did not expect to see a sharp fall in prices, as they should be supported by the Thai government intervention.
The Puea Thai-led government said it would start buying paddy from farmers at 15,000 baht a tonne from October 7 to support farmers.The programme was due to run through end February. Thailand, the world's biggest rice exporter, was forecast to produce 25.1 million tonnes of paddy from the major 2011/12 crop, for which harvesting is due to start in late October.
Rice prices in Vietnam, the second-biggest exporter, were also lower on Wednesday on weaker demand as buyers eyed cheaper rice from India. "The market is very quiet, we are monitoring prices to see how India would perform in coming days," a trader with a foreign company in Ho Chi Minh City said.
"If India starts exporting, it will compete with Thai parboiled rice and Vietnamese low grade rice," he said.The 5 percent broken grade Vietnamese white rice was offered at $545-$550 a tonne, down from last week's $550-$580. The 25-percent broken rice fell to $500 a tonne from $510-$520 last Wednesday, but very few offers were heard, traders said. The country's rice export as of September 8 rose nearly 10 percent from a year ago to 5.45 million tonnes, the Vietnam Food Association said.It planned to export a record of 7 million tonnes this year.