Thai rice prices rebounded 3.8 percent as traders' hopes warmed after the government delayed a sale of its rice stocks, signalling no additional supplies would reach the market in coming days, exporters said on Wednesday.

The benchmark 100 percent B grade white rice rose to $545 per tonne from last week's $525 per tonne as buyers realised supplies would not rise immediately since the rice sale was on hold, they said.

On Tuesday, Prime Minister Abhisit Vejjajiva delayed the sale of 2 million tonnes of rice stocks, concerned the grain could be sold into the domestic market and depress local prices.

"Prices rose as a reaction to the delay of government rice stocks sale, but I don't expect prices to stay at that high level for a long time because demand remains thin," one exporter said.

"Prices would continue to fall over the next few weeks as there's no good news to support prices," another exporter said.

Overseas demand for Thai rice remained thin this week as traders said they could sell only small lots of broken grade fragrant rice to some countries in Asia and Africa.

Despite the political spat that forced the Prime Minister to delay the rice sale, traders expected the government would definitely release its stocks anyway, as it had to cut burdensome storage costs.

"The government has to sell them some day. It may sell smaller amounts through several tenders from now on and that would depress prices anyway," said a trader at an international trading house.

Thailand, the world's biggest rice exporter, exported 10 million tonnes in 2008 and is estimated to sell 8.0 million to 8.5 million tonnes of rice this year, according to the Thai Rice Exporters Association. In Vietnam, the second biggest rice exporter, paddy prices slipped to around 4,100 dong per kg this week, from 4,300 dong per kg last week due to plentiful supply from the winter-spring crop harvest that ended this month, traders said.

Domestic prices for the 25 percent broken grade milled rice fell to around 5,600 dong per kg, or $311 a tonne, from 5,800 dong per kg last week due to the fresh grain from the harvest, according to Vietnam Food Association.

The 5 percent broken rice was quoted unchanged at 6,850-6,900 dong per kg, or around $388 a tonne.

The government estimated this week rice exports in the first five months of 2009 would jump 43.26 percent from the same period last year to a record 3.17 million tonnes. It was forecast to export 5.2 million tonnes in 2009, up from 4.65 million tonnes in 2008, according to the U.S. Department of Agriculture.

Source: Reuters