The price for white paddy rice has fallen an average of Bt1,000 a tonne since last week. The reasons for the new trend include a drop in market demand, both millers and exporters have full stockpiles, and consumers are turning back to wheat flour, thanks to its lower price.
As well, while rice millers and exporters are releasing their stocks into the market, importers are playing a waiting game and delaying placing new orders to see what benefits they may reap from falling wheat prices.
Industry sources say the lower rice prices show that speculation in the local market has had little to do with recent price escalations. However, they reinforce the fact that Thailand has plenty of rice supplies for both domestic consumption and export.
Thai Rice Millers Association president Pramote Vanichanon said paddy rice purchased from farmers fell from Bt13,000 a tonne to Bt12,000 yesterday, because of high market supplies and the fact that both millers and exporters had full stocks.
"The government must urgently seek export markets to ensure [continued] high rice prices, because the new harvest season is closing, and that will bring a price drop, which will have a direct effect on farmers," he said.
As a measure to bolster the market and prevent a sudden drop in prices, the country's five largest exporters yesterday agreed to purchase 35,000 tonnes of paddy sticky rice from farmers for between Bt1,800 and Bt2,000 per 100-kilogram sack.
Commerce Ministry permanent secretary Siripol Yodmuangcharoen said the cooperation of private exporters would ensure that sticky rice farmers did not suffer from falling prices, and the price of sticky rice would not be less than Bt9,000 a tonne. "Rice prices are likely to drop because of slowing demand in major import countries during the summer season, while other food grains, in particular wheat, are returning to normal prices," said Rice Exporters Association president Chookiat Ophaswongse. Chookiat said consumers would return to wheat and that this would cause a drop in rice prices, because of falling demand.
He expects India to begin exporting rice as normal again, because half of its population consumes wheat. The Indian government will no longer find it necessary to control rice exports.
As of last Wednesday, the price of jasmine rice had fallen from $1,245 per tonne to $1,214 in only a week. Regular white rice fell from $1,020 a tonne to $941 in the same period.