Impact on market prices seen; ministry plans more auctions via futures market. A total of 17 traders joined the Commerce Ministry's auction yesterday of 227,000 tonnes of rice via the Agricultural Futures Exchange of Thailand, but their low bids are expected to drag down the market price because of supply exceeding demand.

The turnout has encouraged the Commerce Ministry to schedule another tender for 200,000 tonnes of rice in the futures market on February 26.

The ministry plans to release stocks two or three times a month through the futures market this year.

 The sale yesterday of white rice and jasmine rice was the second in the futures market this year, after 58,900 tonnes auctioned last month.

Somchart Soithong, director-general of the ministry's Internal Trade Department, said the auction was expected to generate Bt1 billion. White rice was bid at Bt1.70-Bt3.49 per kilogram lower than the market price for delivery. Jasmine rice was Bt1.72-Bt4.73 a kilo lower than the market price.

Khao Hom Patum rice is currently quoted at Bt14 per kilo and jasmine rice at Bt27-Bt28, while white rice fetches Bt11-Bt12 per kilo. This means the government would receive only Bt8.50 per kilo if the market price is Bt12 on the delivery date.

 However, Somchart said the government should earn about Bt12-Bt13 per kilo of rice from this auction. In the next round, the offered price should increase, as traders would have more demand for rice outside of the harvest season next month.

 The department reported that the four auctions on the Afet last year could move a total of 186,000 tonnes of rice, generating Bt2 billion. The government should continue to raise money to pay farmers in the near future from selling its rice through various channels including the futures market and public auctions.

The department has insisted that it will continue pushing the plan for rice millers to extend soft loans to farmers. The plan has been proposed to the Cabinet for approval of the budget of Bt1.2 billion to pay the interest on the loans to the millers.

 The Election Commission is also considering whether the plan could be carried out during the caretaker government.

 A rice trader in the Afet said the bids in the futures market were quite low as the market knows that the government needs to release rice from its inventory urgently to generate money to pay farmers under the rice-pledging scheme.

 Traders also know that the government sold rice at very low price in the previous sale of 850,000 tonnes at only Bt9.5-Bt11 a kilo, so the marker price for white and jasmine rice is seen as dropping gradually.

 A Commerce Ministry source said the 460,000 tonnes of rice put up at the public auction on Wednesday was likely only half sold. The successful bidders would be revealed today. Ten of the 18 traders submitting bids that day were qualified.

Source: The Nation