THE GLOBAL rice market is experiencing a price war, Thai exporters say, putting pressure on the Kingdom because of its large government stockpiles. Traders expect Thai rice exports this year to total 8 million to 8.5 million tonnes, down from 10.96 million tonnes in 2014.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said competition in the world market was tough because of a high supply of rice while many importing nations are struggling with weak economies.

"Rice trading is entering a price war, with every country lowering its prices. The price of Thai rice will also be lowered, but not as low as such competitors as India and Vietnam, which have weakening currencies and cheaper rice," Chookiat said.

He said that for every Bt1 the Thai currency weakens against the US dollar, the price of Thai rice drops by about $10 per tonne. However, the price will not go below $400 a tonne for 5 per cent white rice, while domestic prices should not drop much as long as exporters can get more orders from overseas.

Currently, Thai rice is trading at around $430 a tonne, while Vietnam's is traded at $360 a tonne.

Chookiat said the weaker baht should benefit exports of Hom Mali or jasmine rice, making its price more competitive at less than $900 a tonne, down from $1,100. Vietnamese fragrant rice trades at only $490 a tonne, and Cambodia's at $800 a tonne.

Vietnam's decision to devalue its currency also cuts the price of its rice by about $3 a tonne.

Chookiat believes the price war will continue into the third quarter. After that, the market will be affected by rice production in India. If India's output is low, the rice price in the world market could increase.

Because of the relatively high price of Thai rice, the Kingdom this year will not be the world's largest rice exporter.

As of April 28, Thailand had shipped 2.95 million tonnes of rice since the beginning of the year, up by just 2.46 per cent year on year. Meanwhile India's exports soared by 32.11 per cent to 2.87 million tonnes, and Pakistan's increased by 32.09 per cent to 1.73 million tonnes. Vietnam's rice exports were up by 2.71 per cent to 1.71 million tonnes.

Source: The Nation