Asian rice prices slip under harvest pressure
Asian rice prices slip under harvest pressure
SINGAPORE (Reuter): Asian rice prices are slipping due to
harvest pressure from increased supply and expected Indonesian
re-exports, causing buyers to sit back and wait for further
falls, traders said yesterday.
In Thailand, the world's largest rice exporter, traders said
foreign buyers had stayed sidelined in anticipation of lower
prices next month when the country's second paddy crop will reach
the market.
"Prices are softer because there's no buying demand from
overseas," one Thai trader said. "The second crop is coming out
in April, they're waiting for that," he said.
Benchmark Thai 100 percent white B eased to around $368 FOB
from between US$375-$380 two weeks ago and are expected to ease a
little further next week.
In India, analysts said rice exports were likely to come under
pressure from the rupee's rise against the dollar and Indonesia's
attempts to re-export a portion of the huge consignments of rice
it imported last year.
Indonesia is planning to re-sell an estimated 200,000-400,000
tons of rice, most of it Indian origin, from the 2.0 million
tons of rice Jakarta imported in the 1995/96 fiscal year ending
this month.
"If Indonesia attempts and succeeds in selling the Indian rice
to West Africa or Bangladesh, then the export offtake from India
will be as much lower," one analyst said.
Indonesia, a significant rice producer, turned to imports in
late 1994 after prolonged drought hit the domestic crop.
Local harvests have now returned to normal. Combined with the
rise in imports, that has swelled rice stocks with the state
logistics bureau (Bulog) to two million tons in late February
from 1.8 million earlier in the month.
Indian analysts said they estimated Indonesia was holding
about 400,000 tons of rice out of its total imports of nearly
800,000 tons from India in calendar year 1995.
India exported about 3.7 million tons of rice last year.
Southeast Asian traders said other factors behind Indonesia's
attempts to re-export were the low quality of the Indian rice,
drawn from a substantial government stockpile, and the problem of
obtaining storage space.
Estimate
India's rice exports in recent weeks have been dull with most
buyers well covered.
Apart from bottlenecks hampering exports, particularly at
India's ports, the recent strengthening of the rupee against the
dollar had also made Indian rice expensive, traders said.
Higher quality rice varieties are preferred by foreign buyers
with little demand for Indian 25 percent broken grade.
In Vietnam, traders said the government had moved to prop up
prices which have fallen sharply on increased supply from winter
rice crop harvests.
But they said prices were continuing to drop with some dealers
looking to sell five percent broken grade at up to $5.0 per ton
below the government floor of $325 FOB Saigon Port.
"The government has tried to push up the minimum price in
order to benefit farmers. They even tried to push it to $335 a
ton, but there is no fresh demand coming, so none of the
exporters could make a profit," one said.
The price for 10 percent broken grade rice has fallen to $305
per ton, $5.0 below the government floor of $310.
Ho Chi Minh City newspapers said on Wednesday the Bank for
Agriculture of Vietnam had decided to give loans to rice
exporters to enable them to buy paddy from farmers and support
domestic prices, which have fallen by around 400 Vietnamese dong
(3.4 U.S. cents) per kg this month.
"They should be giving the money to the farmers and not the
traders," said one dealer. "This is not going to work."
Traders said that, despite low prices, the volume of
transactions had been almost stagnant with the average price for
five percent broken grade at around $320-$325 a ton FOB Saigon
Port.
"The problem is if you want to sell below the government price
you still have to get an export license and that's difficult,"
one said.