Threat of minimum export price for rice

Threat of minimum export price for rice

The Commerce Ministry has threatened to impose a minimum export price for rice shipments to stop any further price swings caused by manipulations and price wars among traders.

Chutima Bunyapraphasara, the permanent secretary for commerce, said exporters and millers have provided false information with negative outlooks for the industry.

Many of them offered low export sale prices to buyers, prompting significant rice price swings, she said.

"I do not understand why they give such negative outlooks for rice prices as global rice output is on the decline," said Ms Chutima.

She said rice stocks in India are expected to total 16 million tonnes, a nosedive from earlier estimates of 25 million. Vietnam cut its export target this year to 4.75 million tonnes from 6.5 million. The two countries are major rice export rivals to Thailand.

Buyers such as the Philippines and Indonesia are projected to import more rice this year, which should drive up Thai rice prices.

"If traders continue to provide false information and negative outlooks to affect domestic rice prices, some measures will be imposed," said Ms Chutima.

Over the past two weeks, prices of paddy have dropped sharply by about 2,000 baht a tonne in line with negative news. Prices of 15% grade white rice paddy fell to between 8,400 to 9,000 baht a tonne, from 10,000 baht.

The drop came even though new harvests from the 2016/17 main crop have yet to be supplied to the market.

Ms Chutima estimated new supply from the main crop is unlikely to meet the estimate, at only 27.7 million tonnes of paddy.

She said the government has already prepared 17 measures worth over 10 billion baht to help farmers and absorb the new supply during the harvest.

The government's ongoing rice sales are unlikely to affect rice market prices as the grains in state stocks are mostly old, said Ms Chutima.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, agreed with the ministry's threat of a minimum export price but doubts whether the measure will be effective enough to deal with price speculation.

He said there were other factors that caused falling market prices besides price manipulation by rice traders.

Mr Chookiat said China's abundant rice output and the tendency of international markets to buy smaller volumes of rice this year is one major factor. In addition, the recent announcement by the Philippines that it would buy a lower volume of rice than expected, some 250,000 tonnes, is another factor affecting Thai rice prices.

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