Local rice exporters' worries are growing as foreign purchase orders remain low largely because of weak demand and a strong baht.

"Weakening global demand, particularly caused by growing concerns about the European debt crisis and the stronger baht are the key factors behind lower exports," said Korbsook Iamsuri, president of Thai Rice Exporters Association.

"We are unlikely to achieve the rice export target set earlier set at 9 million tonnes this year."

Thailand is now expected to ship about 8.5 million tonnes of rice this year, unchanged from last year, she forecast.

Chookiat Ophaswongse, honorary president of the association, said orders were slowing because foreign buyers believe prices could fall further. They are now waiting to see the prices to be offered by Middle Eastern buyers for 150,000 tonnes of Indian parboiled rice.

According to Mr Chookiat, parboiled rice would remain Thailand's key product, while shipments of white rice remain sluggish because it costs up to $100 a tonne more than comparable Vietnamese grains.
As well, the recent political violence in Thailand prompted some buyers to shift to Vietnam as they were uncertain about the ability of Thai suppliers to make deliveries.

Thai rice prices, the benchmark for Asia, have fallen for six consecutive weeks and are now at a two-year low.

The exporters' association, which meets every Wednesday to set prices, currently quotes 100% grade-B white rice at $476 a tonne, down from $479 on May 12. The price is the lowest since February 2008, when it averaged $466.25.

However, Mr Chookiat said he believed prices had bottomed out and were expected to recover in July, as world production is expected to start feeling the effects from a widespread drought.

He forecast rice prices would increase by 20-30% next month.

Source: Bangkok Post