The government sold 1.15 million tonnes of high-quality grains in the latest rice auction for 11.1 billion baht as fears for a global drought ignited purchase demand.

Duangporn Rodphaya, director–general of the Foreign Trade Department, said the Commerce Ministry's auction late last month saw the highest amount of sales since this government started state stock auctions.

The latest auction sold 83% of the rice put up for sale, outpacing the 79.2% sold in late May and bettering the average of 50-60% in previous auctions.

The Commerce Ministry has held eight auctions to speed up disposal of 18 million tonnes of state stocks accumulated from rice pledging schemes. It has sold 3.88 million tonnes for 40.9 billion baht.

Ms Duangporn said the latest auction drew 55 interested bidders, with the winning bidders proposing prices 5% higher than the floor prices set by authorities.

She attributed the active participation to higher demand triggered by fears of a possible worldwide drought.

However, the government has fetched an average of only 10,000 baht per tonne of milled rice from the auctions, much lower than the 24,000 baht a tonne spent by the previous government for pledging, excluding rice management costs and interest rates. It estimated losses incurred from the auctions are at least 55 billion baht.

The government controls 14.3 million tonnes of rice, 4.6 million of which is categorised as low-quality grains, 1.29 million is rotten, and about 8 million tonnes dubbed as Grade P, meaning its quality passes Commerce Ministry certification and it is a mix of Grades A and B. Grades A and B are defined as grains in slightly poor condition that need sorting out for improvement.

The government has set an ambitious goal to sell all existing rice stocks by 2016.

Ms Duangporn said a working panel would be set up next week to manage the disposal of low-quality and rotten rice, mainly for industrial uses.

As of July 3, Thailand had shipped 4.6 million tonnes of rice this year, fetching 74.8 billion baht, down by 3% and 4% year-on-year respectively.

Source:  Bangkok Post