The Commerce Ministry's latest round of bidding for 302,000 tonnes of white rice and 75,000 tonnes of sticky rice drew many bidders seeking to buy a combined volume of nearly 1 million tonnes, showing high demand in the world market.

However, average prices offered by a field of 22 bidders are lower than present market prices.

The ministry's Foreign Trade Department has not yet finalised the results of the bidding, because it wants to bargain for better prices to ensure minimum losses for the government.

The department's director-general Vichak Visetnoi said even though prices offered were lower than the present market price, they were not too low for bargaining.

The ministry today will start bargaining with those bidders offering the highest prices, in order to ensure the government receives the highest returns, he said.

"We must ensure the bargaining price is as close as possible to the market price, so that the government does not face too great a loss," he said, adding that the bargaining procedure was expected to be concluded this weekend and a result submitted to the Cabinet next Tuesday.

Twenty-two bidders yesterday offered an average of Bt16,000 to Bt16,200 a tonne for the white rice, while the present market price is quoted at Bt16,900 to Bt17,000 a tonne. The highest price offered was Bt16,276 and the lowest, Bt15,100.

The top five bidders were Capital Cereal, Asia Golden Rice, Chaiyaporn, Ponglarp and CP Intertrade.

If the government decided to sell its entire stockpile of rice, it would earn at least Bt5 billion from the bidding. However, this would fall short of covering the government's accumulated costs of the price-pledging scheme.

A source from one of the bidding companies said the firm had calculated its offer was suitable under present market conditions. However, in the bargaining process it could increase the offer by Bt100 to Bt200 a tonne.

If the company were forced to offer a price higher than the present market price, it would simply buy its rice directly from the market, because its operational costs would be lower, the source said.

Thai Rice Millers Association president Pramote Vanichanont said the government should be able to sell rice at the market price, because there was high demand in the market.

However, he suggested the government would not face much of a loss if it altered its procedure and sold its rice via the futures market.

Selling rice under the Agricultural Futures Exchange of Thailand would be transparent and not affect market prices. Rice traders would not be able to depreciate the value of rice by offering low prices, Pramote said.

Source: The Nation