Indonesia delays rice shipments from Thailand

Indonesia delays rice shipments from Thailand

BANGKOK (Reuters): Indonesia has delayed taking delivery of shipments of around 100,000 tons of Thai rice due to problems with its letters of credit following its announcement of a temporary freeze on corporate debt repayments, traders said yesterday.

Shipments would be delayed by two to five months, they said.

"If Indonesia's debt situation does not improve, we can expect more rescheduling of shipments," said one trader.

In Jakarta, officials at the State Logistic Agency (Bulog) declined to comment on the report.

"I can't give you a comment on that," said a Bulog spokesman.

The spokesman also refused to confirm remarks by Thai traders that shipments had been delayed.

Industry sources estimate that Indonesia has bought 300,000- 400,000 tons of rice from Thailand since late last year, 200,000 tons of which had been delivered so far.

Indonesia is a leading buyer of Thai rice, with the potential to buy up to 800,000 tons from Thailand this year alone, trade sources said.

Upward pressure on Thai rice prices eased this week as Indonesia delayed taking delivery of at least 100,000 tons of Thai rice due to financial problems, traders said.

Fresh orders were thin as buyers were sidelined by renewed volatility in the Thai baht this week, although the market believed overall demand remained strong.

Benchmark 100 percent B grade rice was quoted around $300-310 ton FOB Bangkok. The 100 percent jasmine or fragrant rice was quoted around $600-620 per ton on the same basis.

The market was divided over Indonesia's decision to delay rice shipments. While some traders saw the development as merely a hiccup, others said they feared this could be a start of a flood of bad news.

Shipments will be delayed by two to five months.

"It is no doubt bad news but I wouldn't worry much. The problem is very likely to be temporary. Indonesia will need to import up to 2.0 million tons this year and it is crucial for them that basic demand is met," said an executive at one major rice firm.

Indonesia is a leading buyer of Thai rice, with potential to buy up to 800,000 tons from Thailand this year alone, trade sources said.

Activities this week focused mainly on loading rice for delivery to Asian, Middle Eastern and African destination.

Thailand has exported 719,049 tons of rice between Jan. 1 and Feb. 3 compared with 397,736 tonnes during the same period last year.