Indonesian demand bumps up rice prices in Thailand

Indonesian demand bumps up rice prices in Thailand

BANGKOK (Reuters): Indonesian demand for Thai grain could
drive up Thailand's domestic rice prices, trade sources have
said .

Indonesia is set to import a record five million tons of rice
this calendar year and Thailand will be one of its major
suppliers, the sources told Reuters.

The chase for much-needed foreign currency, as economic
turmoil grips Thailand, would prompt exporters to sell as much
rice as possible abroad, they said.

As a result, Thai consumers could see a dwindling in local
rice supplies and corresponding surge in retail prices, they
said.

"If export demand is this strong, it is inevitable that local
prices will rise sharply and I think Thais should be prepared to
face that reality," said Vorapong Pichpongsa, president of the
Thai Rice Exporters Association.

Thailand is expected to sell at least 1.5 million tons of rice
to Indonesia this calendar year, he said.

"I can see Thailand exporting 1.5 million tons to Indonesia
easily. I don't think we can provide more unless our next crop is
good," he said.

"This is because the export demand for our regular customers
already tops 4 million tons each year. We must be careful not to
upset local stocks either," he added.

Local retail rice prices have already soared because of
bullish export demand, dealing another blow to Thai consumers
already pinched by the country's economic problems.

Commerce ministry data show retail rice prices have surged 47
percent year-on-year in February in Thailand due to tighter
supplies brought about by strong export demand.

But trade sources said the worst is yet to come for Thai
consumers.

If Jakarta's buying power is restored, Thailand was ready to
sell Indonesia more than 1.5 million tons of rice, the sources
said.

"If Indonesia is to really import five million tons, which is
around a quarter of the world rice trade this year, Thailand is
set to export more to that country," said a trader with one major
rice trading firm.

"Last year, Indonesia imported around 750,000 tons of rice and
Thailand supplied around 500,000 tons of that amount. Will
Vietnam, China and India be able to provide 3.5 million tons?" he
added.

"They might be, depending on the supply-demand situation of
these countries. But if they cannot, Thailand is likely to fill
the shortfall," he said.

Thailand has projected that its rice exports this year will be
around 5.3-5.5 million tons compared with 5.27 million tons last
year.

The unhusked rice output for 1997/98 crop (April-March) is
expected to be 21-22 million tons.