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.