Rice traders yesterday warned about a repeat of bidding collusion, which would see the government's main stockpile fall in the hands of a giant exporter and trader and cause problems for Thai rice trading in the future.

The government will on Monday open bidding for 753,000 tonnes of rice, of which 210,000 tonnes are targeted for export.

A rice trader said the government must ensure transparency in the auction, as some exporters could collude and win a big lot like in the past.

According to a report to the Commerce Ministry, Siam Indiga - known as the new marketing arm of the bankrupt President Agri Trading - has become the country's third-largest rice exporter behind Capital Rice and Asian Golden Rice.

President Agri Trading was the biggest rice exporter during the Thaksin administration and bagged a big lot of government rice in 2005.

Siam Indiga is also responsible for distributing government rice to other exporters under the government-to-government project for the current government. The firm was employed to deliver rice to Indonesia this year when Kittiratt Na-Ranong was commerce minister.

The firm recently received an order to supply Iraq and will ship more rice soon.

The report showed that Siam Indiga exported 344,000 tonnes of rice in the first four months of this year, up drastically from 228,000 tonnes in the same period last year, even as the country's total rice exports plunged 45.9 per cent to 4.1 million tonnes.

Rice traders believe that the government's plan to release 753,000 tonnes will force the market price down because of the big inventories carried by Thailand and India, despite rising concern over drought, which would hit output worldwide.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said that inevitably the global and domestic prices of rice would decline following the government's bidding plan.

"The government's pledging programme will be unsuccessful in lifting rice prices. When the government announces the release of its huge inventory, the rice price will slide easily," he said.

The world market would still know that Thailand has massive rice stocks from the pledging scheme and that the government would need to gradually unload those stocks. This would cause rice prices to fall.

India, the world's largest rice exporter, also keeps a huge buffer stock of 34 million tonnes for exports. The rice price in the world market will not go up as easily as the government had planned.

Although the government will release rice to the market, that will not support Thai rice exports. Thailand is expected to achieve only 6.5 million-7 million tonnes of shipments this year.

Although the government has claimed that it has huge export orders under government-to-government contracts, Thailand will be unable to ship 1 million-1.2 million tonnes of rice each month for the rest of the year, he said.

According to the Thai Rice Exporters Association's report, the price of Thai rice has increased slightly this week because of higher demand from Nigeria.

As of yesterday, jasmine rice was at US$1,104 (Bt33,000) a tonne, up from $1,100 last Wednesday. The price of 5-per-cent white rice increased from $564 to $566 a tonne, while parboiled rice was up from $612 to $620.

Thailand would this month be able to export about 500,000 tonnes of rice, of which 200,000 tonnes would be for Nigeria.

The Nigerian government plans to hike rice import duties early next year, so importers are hurrying to lock in more parboiled rice from Thailand this year.

Somkiat Makcayathorn, president of the Thai Rice Packers Association, said the price of Thai rice would slide in line with the government's bidding.

"Traders will offer a lower quote at the auction as they need to shoulder some risks. The government needs to accept some losses from the bidding and the hike in pledging prices as the world market is aware of the huge supplies of Thai rice," he said.

The government may cancel Monday's tender again, as traders will offer low prices, he added.

However, Charnchai Ratthananon, president of the Thai Rice Millers Association, expects rice prices to increase soon due to the serious drought in many countries, which would reduce cereal crops.

If the drought is prolonged for two more weeks in the Northeast of Thailand, rice production would be affected and lead to higher prices this year, he added.

Source: The Nation