Domestic paddy and rice prices are expected to rise after the government kicked off its paddy-buying programme to prop up prices during the current harvest. But rice traders said rice prices would be mainly determined by demand from the Philippines and India as their production has been hit by adverse weather.
The government yesterday launched its paddy-buying programme, which covers about 2 million tonnes of paddy for the 2009-10 main harvest, from November to March. Thailand is expected to produce about 23.5 million tonnes of paddy from the main crop.
The programme gets 20 billion baht from the Thai Khem Kaeng stimulus programme and runs until next February.
The government had planned to end its direct intervention in the rice market, but opted for a scheme that subsidises farmers without buying grain. It is now running both schemes in parallel due to protests from farmers.
The ministry would initially start buying paddy for the 2009-10 main crop in Phitsanulok, Kamphaeng Phet and Nonthaburi.
Rates would be based on the government's reference prices set at 8,389 baht per tonne for paddy with 15% moisture.
After heavy rain, local prices have fallen to between 6,000 and 6,500 baht for paddy with moisture exceeding 30%.
Chookiat Ophaswongse, president of the Thai Rice Exporters Association said the free-on-board price of benchmark Thai white rice 100% Grade B is expected to rise to US$600 per tonne in the first quarter next year, up from $530 now.
According to Mr Chookiat, drought-hit India will be a net importer for the first time in 21 years next year, while the typhoon-ravaged Philippines is expected to import as much as 2.5 million tonnes next year, up from about 2 million tonnes.
India may import as much as 1 million tonnes next year after its wet season harvest plunged.
The weak monsoon caused India's production to drop which may see stockpiles plunge by one-third to 20 million tonnes in the year ending September 2010, the lowest level in five years.
"This is a good opportunity for the government to sell its stocks," said Mr Chookiat. The government plans to sell 950,000 tonnes of rice from its stocks through government-to-government deals in the remaining two months of the year and will release another 1.77 million tonnes in 2010.
The government is estimated to have the equivalent of 6 million tonnes of milled rice in its stores, bought from farmers under previous price-intervention schemes.
Source: Bangkok Post
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