Global rice trading next year will be dominated by government-to-government deals fetching big-lot orders.

Major importing countries next year will include Indonesia and Bangladesh among others, several of which have not purchased any rice since last year, due to the high price, but have turned their focus towards increasing local production.

The biggest concern among exporters is the high price, which may force buyers to avoid imports and look for alternative crops.

So far, the Indonesian government’s rice import agency, Bulog, has proposed to buy 50,000 tonnes of rice from Thailand. Despite being one of the major rice importers, Jakarta suspended imports last year while trying to boost its own production.

Commerce Minister Porntiva Nakasai said the price of rice would be on a rising trend from now onwards due to high demand in many countries. Many governments want to buy Thai rice, with estimated total volume running into several million tonnes under government-to-government contracts.

The Thai government has committed to selling 50,000 tonnes of rice to the Indonesian government. Porntiva said Indonesia has proposed to buy more rice from Thailand.

Porntiva added that the government will suspend release of rice from the stockpiles for a while in order to ensure adequate supply for domestic consumption.

The government is still estimating the rice crop losses from the flash floods in more than 40 provinces. Earlier, it was reported that at least 6.9 million rai of the Kingdom’s total 57 million rai of rice plantation had been damaged by the flooding.

Porntiva said Thailand should have adequate supply for domestic consumption. However, the government will suspend exports until the report clearly shows that it will not affect national food security.

Currently, the country has more than 2 million tonnes of rice in the warehouse after releasing about 3 million tonnes overseas.

PRICE FACTOR

Korbsook Iamsuri, president of the Thai Rice Exporters Association, said price is the most important factor in buyers determining whether to purchase Thai rice.

 “We have to consider our strategy: whether to quote an unreasonably high export price that could cost us orders as importers don’t want to pay such a high price. Farmers will be the poorest group despite the high price and enough supply,” Korbsoon pointed out, adding that rising prices have always hurt trading.

Thai rice exports, particularly parboiled rice, jumped from US$515 (Bt15,200) earlier to $550 per tonne last week. Exports of Thai parboiled rice had increased significantly after India imposed an export ban last year.

Korbsook added that the world economic environment was another factor that has reduced consumer purchasing power. However, the government and major traders and brokers will play a key role next year with big-lot orders.
Although flooding has damaged farm areas and rice farms, Thailand will have enough production to serve both the export and domestic markets, Korbsoon insisted.

The US Department of Agriculture has forecast that world rice trading volumes will increase slightly from 30.1 million tonnes this year to 30.5 million tonnes next year. Global rice production is predicted to reach 452.5 million tonnes next year compared to 441.5 million tonnes this year. Total rice consumption will jump from 438.1 million tonnes to 452.7 million tonnes next year.

Major rice-exporting countries are Thailand, which maintains its position at the top, followed by Vietnam, the US, Pakistan, India, China, Cambodia, Uruguay and Argentina. Major importing nations include the Philippines, Nigeria, Saudi Arabia, Iran, Iraq, Malaysia, Ivory Coast, South Africa and Japan.

Korbsook said the floodwaters would not affect rice production much, particularly jasmine rice. However, white paddy-rice supplies would be interrupted. The total damage has not yet been fully estimated.

“We hope that white paddy rice supplies will enter the market within two months to create bullish trading and price. If it is delayed for four months, we fear a bearish market,” Korbsook said. He added that it would not be a positive trading practice if the price was high but supply was low as exporters and traders have to get involved in fierce competition to ensure their shipments.

AFFECTED BY FLOODS

Rice millers foresee skyrocketing prices throughout next year

Banjong Tangjitwattanakul, chairman of the millers group in Phichit, said at least 20-30 per cent of rice production will be lost from the flooding in the Central and the Southern parts.

“The rice price is expected to go up by 10 per cent during the next 10-15 days and will continue to rise in the future due to high demand in the market. Many cereal-crop plantation areas in many countries have been also damaged by natural disasters,” he said.

Thailand should still enjoy dominance in export of parboiled rice next year as India is unlikely to lift its export ban easily due to concerns over climate change, he said.

In the past week, the price of white paddy rice surged from Bt8,500 to Bt9,000-Bt9,200 a tonne.

Banjong said that rice exports would grow gradually in the final quarter this year and throughout next year. Lower government stockpiles will also encourage higher prices in the market.

Source: The Nation