Thailand to Release Rice From Stockpiles for Export

By Supunnabul Suwannakij

Nov. 17 (Bloomberg) -- Thailand, the world’s biggest rice exporter, will release part of its 5.9 million metric ton stockpile for export as growing demand from countries like the Philippines causes prices to climb.

The Foreign Trade Department expects to ship 1.7 million tons of rice next year to nine countries, including China, India, Indonesia and the Philippines, under a state-to-state sales program, Vichak Visetnoi, director general of the department, said in Bangkok.

Rice import demand has increased after cyclones damaged an estimated 1.3 million tons of crops in the Philippines, the world’s biggest buyer. A slump in India’s monsoon harvest may turn it into a net importer for the first time in 21 years in 2010, the International Rice Research Institute has said.

“Now is the best time for the government to reduce its stock,” said Kiattisak Kanlayasirivat, director of Novel Commodities in Thailand, which is involved in Thai rice trading worth about $600 million a year. “Strong demand from the Philippines and India will help cushion any downward price.”

Including sales to smaller buyers, Thailand will ship more than 2 million tons under the state-to-state program next year, Commerce Minister Porntiva Nakasai said on Oct. 29. Total exports may increase to a record of more than 10 million tons next year, the Thai Rice Exporters Association said on Nov. 11.

“People in the rice market see that next year will be a seller’s market,” said Vichak. “Signs are clear that rice will increase further but may not climb as high as 2008.”

High Stockpiles

Gains in prices next year may be limited because Thai stockpiles are almost triple last year’s 2 million tons, the association’s President Chookiat Ophaswongse said.

Rice futures traded in Chicago have jumped 36 percent from this year’s low of $11.195 per 100 pounds on March 16. The price surged to a record $25.07 in April 2008 as concern that there would be a supply shortage prompted India and Vietnam to cut exports.

Rice for January delivery slipped 0.4 percent to $15.20 as of 1 p.m. in Singapore, after jumping 2.7 percent yesterday. Thai 100 percent grade-B white rice, the regional benchmark export price, which reached a record $1,038 a ton in May 2008, is now $542 a ton.

The Philippines, the world’s biggest rice buyer, yesterday issued its third tender for 2010 supplies as the country accelerates purchases to secure shipments amid surging prices.

The country will hold a tender for 600,000 metric tons of rice on Dec. 8, a week after a record 600,000 ton tender on Dec. 1, pushing the country’s purchases for 2010 to 1.45 million tons before the end of this year.

The U.S. Department of Agriculture estimated on Nov. 10 the country will import a record 2.6 million tons next year, out of an estimated total world trade of 29.5 million tons.

To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net