Rice prices are expected to keep falling further due to frequent rice sales held by the government and its hasty attempts to dispose of huge stocks of the grain.

Prices have fallen drastically, said a source from the rice trading industry. This is due entirely to the caretaker government s actions. First, it has frequently opened its rice stocks for sale.

Second, it sold the stocks at relatively low prices through a secret channel that allows certain exporters who have purchase orders to buy directly from the government.

According to the source, the government sold its grain at only 9.60 baht a kilogramme via the second channel, which sold up to 800,000 tonnes, much lower than the market price now quoted at 12-13 baht per kg.

He said prospective buyers are also reluctant to buy the government s rice stocks that were put up for auction via the futures market, saying the buying prices through the futures market have been found to higher than the prices the government sold them through the secret channel.

Selling prices through the Agricultural Futures Exchange of Thailand (AFET) average at 11.50 baht per kg.

Yesterday, the government put up another 244,00 tonnes of its rice stocks for sale through the futures market, but this time it drew lukewarm response from interested bidders, with only seven joining the bid. In the previous attempt, up to 34 parties had participated in the bidding.

Acting AFET president Sakda Thongpalad admitted the government s hasty attempts to sell its rice stocks through several channels made the bidding less attractive.

The government plans to sell up to 1 million tonnes through AFET and raise not less than 18 billion baht. But AFET has so far has sold only 389,000 tonnes, raising 4.8 billion baht through the auctions, which began last October.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said prices are highly likely to see a further drop by 10-15% next month and in May due not only to the caretaker government s hasty efforts to dispose of its massive rice stockpiles to raise funds to pay farmers but also new massive supplies, notably from Vietnam s winter-spring crop, which are due to be churned out during the period.

The winter-spring crop is Vietnam s biggest, and most of the grain is exported. The harvest often peaks in March.

Given the demand side in the market, buyers in the market themselves are very cautious about their purchases, as they speculate the rice prices tend to drop more, said the source.

But for farmers, it is cruel to see them earn steeply lower income, as the prices of their paddy with 25% moisture could possibly drop to only 5,000 baht a tonne without any assistance from the government that functions only as the caretaker.

The source said the predicament of farmers is expected to worsen, as no new measures have been worked out how to cope with new supplies from the second crop, which is about to be released

Source: Bangkok Post