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Published on April 18, 2008

Petchanet Pratruangkrai

The Nation

Thailand's rice exporters have been shocked by a bid from Vietnam to sell 110,000 tonnes of rice to the Philippines at the historically high price of US$1,200 (Bt37,700) per tonne.

They are concerned that since the bid involves grain of only medium quality, the prices for higher-quality rice will escalate suddenly, and the international rice trading system may be seriously damaged.

The bid came as the Philippines sought offers from rice-exporting countries to fill its need for 500,000 tonnes of rice.

Vietnam, whose rice crop was seriously damaged by poor weather last year, had all but bowed out of this year's international market. But it re-emerged to offer 110,000 tonnes of 25-per-cent white rice at $1,200 per tonne, when there are six grades of white rice above the 25-per-cent grain, to say nothing of premium grades like jasmine or basmati rice.

Sompong Kiti-reanglarp, president of Ponglarp, one of four Thai traders involved in the bidding, said the offer would drive up prices of all types of rice and increase the difficulty of trading in a world market already shell-shocked by skyrocketing prices.

As of April 9, the Thai free-on-board export price for 100-per-cent white rice - one of the highest grades of white rice - had surged sharply to $854 a tonne and for jasmine rice to $1,130. Early last December, 5-per-cent white rice - one grade down from 100-per-cent white rice - was fetching $348 and jasmine rice $606.

"The maximum price of 25-per-cent white rice should not exceed $900 a tonne. However, this price [from Vietnam] will jack up prices for other kinds of rice, and rice-importing countries will step back from their demands. Thai rice exporters are already afraid of selling rice, because of the skyrocketing prices," Sompong said.

Vietnam's quotation was the highest in bidding yesterday. Thailand and Pakistan quoted prices of $1,107 to $1,150 per tonne and $870 per tonne, respectively. Thai exporters offered 200,000 tonnes and Pakistan 24,000 tonnes. Altogether, the three countries offered to sell 334,000 tonnes, well below the Philippines' demand for 500,000 tonnes.

The Manila government is expected to announce the results of the bidding in the next few days. It is expected to bargain for lower prices.

Four of Thailand's largest rice exporters participated in the bidding: Capital Rice, Chaiyaporn, a consortium of Ponglarp and Thai Hua (1968) and Asia Golden Rice.

Rice Exporters Association president Chookiat Ophas-wongse said the high price quoted by Vietnam could scare off buyers.

The Philippines was expected to bargain for lower prices from all bidders, but its need for rice supplies will probably prevent it cancelling the bidding, he said.