COMMODITIES: IMPACT ON BUSINESSES AND CONSUMERS
But levels expected to drop late this year
POST REPORTERS and WIRE SERVICES
Workers pack five-kilogramme bags of rice in preparation for a campaign offering lower-priced rice for sale to consumers at a government rice warehouse in Bangkok. |
Local rice prices are expected to be volatile for the foreseeable future, despite gains in the world market after a cyclone in Burma flooded 5,000 square kilometres of farmland, and Malaysia began imports from Thailand.
''The continued price surge in world markets stems largely from psychological impact fuelled by expected limits on rice exports by Burma after the recent cyclone disaster,'' said Chookiat Ophaswongse, the president of the Rice Exporters Association.
''But in fact, Burma is rice self-sufficient and its rice exports are relatively small, so it is unlikely to affect the global market price much.''
Burma had been expected to export 500,000 tonnes of rice this year, including to Sri Lanka and Bangladesh. According to the US Department of Agriculture, Burma was forecast to produce 11.3 million tonnes of milled rice this year.
''The crop damage in Burma has fuelled concern over tight global supplies and prompted importers to rush for the grain,'' said Hiroyuki Kikukawa, general manager of the research department at IDO Securities Co. ''Any supply disruptions may stoke panic buying.''
Rice futures, which touched a record last month, rose as much as 3.5% to $22.35 per 100 pounds on the Chicago Board of Trade.
Nigeria, the world's second-largest rice importer, dropped import levies yesterday for six months ''to cushion the impact of the global food crisis on vulnerable citizens'', according to a statement from the country's agriculture ministry.
Prime Minister's Office spokesman Vichienchote Sukchotirat said Malaysia had asked to purchase 500,000 tonnes of 5% and 15% white rice from Thailand as the latter's national stockpile had enough supplies to last only 15 days.
Dato' Mustapha Mohamed, Malaysia's agriculture minister, met Prime Minister Samak Sundaravej yesterday to discuss the deal.
''Malaysia seeks an emergency purchase as a precaution to avert a rice shortage,'' Mr Vichienchote said. ''Thailand will help by sending at least 100,000 tonnes or up to half the requested amount immediately.''
The rest would be sent within the next three days, he said, adding that Thailand would sell the rice at market.
Iran, another major buyer, is likely to start buying Thai rice in June when prices are expected to drop, according to Wanchai Varavithya, Thai Minister Counsellor (Commercial) to Teheran.
Iran imports around one million tonnes of rice each year, of which around 600,000 tonnes usually come from Thailand, but the country has yet to buy any Thai rice this year because of high prices, Mr Wanchai said.
''There is constant rice demand in Iran. It should buy Thai rice [in a volume] no less than what it used to buy, but it is waiting for an appropriate time and price,'' he said.
Thai rice prices have surged to a historic high this year, with benchmark 100% B grade white rice jumping above $1,000 a tonne in April, from the $383 a tonne quoted in January. Prices fell to $920 a tonne yesterday.
Mr Chookiat said prices were expected to drop, given lower rice exports in the second quarter, the release of the second crop, and more importantly a ''huge'' stockpile with millers.
According to Mr Chookiat, millers are expected to hoard up to five million tones of milled rice. Rice in exporters' stocks is estimated at two million tones.
''Rice demand remains strong, but a rapid and frenetic price surge has prompted the buyers to delay price deals and opt for a wait-and-see approach before the price eases,'' he said.
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