Thai exporters resume Indonesian rice shipments

Thai exporters resume Indonesian rice shipments

BANGKOK (Reuters): Thai rice prices firmed this week as some exporters resumed shipments to Indonesia and Iran began purchasing actively, trade sources said yesterday.

But exporters were still reluctant to take fresh orders from Jakarta and were trying to get the Thai government to help shoulder risks, they said.

"There will be a meeting soon on how we can continue selling rice to Indonesia with reasonable levels of peace of mind," said a marketing manager of a major rice trade company.

"Exporters will try to persuade the government to share the risk by making a government-to-government deal with Indonesia as in the past," he said.

Traders said exporters had resumed rice shipments to Indonesia because more banks started to guarantee letters of credit after political tension eased.

Last month Thai exporters temporarily suspended outstanding deliveries of 200,000 metric tons of rice to Indonesia unless the sales were backed by letters of credit from credible banks in third countries.

Thailand is the world biggest rice exporter.

Local supplies were tight this week as Iran sent ships to lift rice from an estimated 200,000 tons bought from Thailand recently.

"The shipments of the rice are scheduled to be completed by August," said one trader.

Thai benchmark 100 percent B grade rice rose to $345 per ton on FOB basis compared with $330 per ton last week and 100 percent fragrant edged up to $675 per ton on the same basis from $660 a week earlier.

The tight supply was also caused partly by liquidity and labor problems besieging rice mills.

Millers say the government's campaign to repatriate illegal foreign workers will have a severe impact on rice trade as the industry employs a large number of such workers, mostly from Myanmar.

Trade sources told Reuters that the industry recently struck an unofficial deal with the authorities which allowed the industry to continue employing such workers until next month. In the meantime, Thai replacements would be recruited.

"The stop-gap measure will help a lot...at least for now, especially at this time when second crop rice is entering the market," said one miller in Ayutthaya province.

A commerce ministry official estimated Thailand would be able to export at least 400,000 tons of rice in June. The country has exported around 2.80 million tons of rice between Jan. 1 and June 1.