Thailand will negotiate with the Indonesian government this week in hopes of selling 1 million tonnes of rice to the country.

Pakin Sommit, an adviser to Commerce Minister Boonsong Teriyapirom, said a delegation will be led by the minister to meet with Sutarto Alimoeso, the president of Bulog, the Indonesian government's rice-purchasing agency.

Earlier, a memorandum of understanding was signed in which Thailand would supply up to 1 million tonnes of rice to Indonesia.

The Thai side will likely propose selling 5% white rice from the government's mortgage scheme for the main crop of the 2011-12 season under a government-to-government (G-to-G) deal.

The goal is to sell at a price close to the pledged price, in line with the Commerce Ministry's policy of positioning Thai rice as being of high quality and of determining the global rice price.

The government pays 15,000 baht for a tonne of white paddy with 15% moisture content and 20,000 baht for Hom Mali paddy.

At this pledging price, the cost per one tonne of white rice should be about 22,700 baht.

Korbsook Iamsuri, president of the Thai Rice Exporters Association, said she approves of the government's move to sell rice under a G-to-G contract.

However, she cautioned the government to be thorough about delivery and rice quality in order to avoid a repeat of previous problems when Siam Indica Co could not deliver rice on time.

"The rice export trend in the second half remains quiet, so the private sector is pinning its hopes on the government's G-to-G deal, as it is expected that Thai rice exports will decline this month due to the high prices of Thai rice," said Ms Korbsook.

The free-on-board price of Thai 5% white rice is US$600 a tonne due partly to the baht weakening, while the price in Vietnam is $410 a tonne, India $420 and the US $550. Prices have remained stable due to high output from Vietnam.

Source: Bangkok Post