The government will need to eat a loss of Bt5,000 for each tonne of rice it tenders because of the gap between the high pledging price and the market price, a top trader claims.

"Traders will quote Bt16,500-Bt17,000, or about US$530-$560, a tonne at the government's auction, lower than the pledging cost, which is Bt23,000 a tonne," Sompong Kitireanglarp, president of Ponglarb, one of the leading exporters, said yesterday.

The government will not be able to sell rice at $600 a tonne as it expects because the market price is only $560, he said.

However, the government has to proceed with unloading its huge inventory on the market as it is now facing an overstocking problem.

When harvesting of the main rice crop starts late next month, more than 10 million tonnes of paddy is expected to enter government warehouses, so current stocks have to be released to clear up space.

The government will also have to absorb the high cost of holding rice.

For a new lot of rice, that is estimated at $30 a tonne, including transport, fumigation, surveying, bags and warehouse rent, Sompong said.

The bidding for 753,000 tonnes of government rice on Monday will draw fewer traders than in the past because of the low demand in the market, he said.

Exports in the remaining months will still be less than a million tonnes a month. The government will not find it easy to ship more than 1 million to 1.2 million tonnes as it claims under government-to-government deals.

It will have to lower the price of Thai rice to $460 a tonne - the same as Vietnamese rice, he said.

Some unscrupulous warehouse owners and state officials are also planning to collude to defraud the government, Sompong said.

Winners of the bidding should carefully inspect rice quality before taking delivery of the government's stocks.

Source: The Nation