Rice traders on the world market have temporarily paused dealing to wait for the Thai government to sell its stockpile cheap to repay a 20 billion baht loan to finance the rice-pledging scheme, according to an exporter of the grain

The Election Commission (EC) has approved the caretaker government's plan disburse 20 billion baht from the Central Fund to pay farmers long-overdue money for pledged rice crops.

However, the government must pay back all the money before May 31, 2014.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said the price of 5% broken rice price from Thailand had dropped by US$20 a tonne, from $435-445 three weeks ago to $415-425 a tonne.

The price of Thai parboiled rice has also fallen by $15 a tonne in one week, from $460-470 to $445-455 a tonne.

He predicted that the price of Thai rice would drop further in the near future since Vietnam second-crop rice would be harvested from the middle of March onwards. Vietnam is expected to produce more than 10 million tonnes of unmilled rice this harvest.

At the same time, rice producing countries including India and Pakistan also hold significant stocks to be released onto the world market. As a result, tougher competition is expected and prices are likely to be pressured down, he said.

The price of 5% white rice from Vietnam is currently between $385-395 a tonne, while India selling its equivalent at $415-420 and Pakistan at $395-405.

Rice buyers have stopped purchasing as they wait for cheaper prices, particularly after the Election Commission set the deadline for repayment of the 20 billion baht at the end of May. This means that Thailand has to sell more than two million tonnes in the market. When buyers realised this, they decided to wait to buy cheaper rice said Mr Chookiat.

The Thai Foreign Trade Department on Wednesday announced a government-to-government deal with China to sell one million tonnes of rice, with an agreement inked by the department and the state-owned China National Cereals, Oils and Foodstuffs Corporation in Beijing this week.

Source: Bangkok Post