Two private Thai firms won a bid on Tuesday to buy 37,413 tonnes of rotten rice, the Commerce Ministry said after the first auction of spoilt grain by the government.
The government said last month it would begin selling rotten rice from state warehouses for industrial use, looking to offload stockpiles of the staple grain built up under a previous support scheme for farmers.
The rotten rice would be used to produce ethanol, among other things.
The rice, worth about 198 million baht, is the first lot taken from about 6 million tonnes of rotten rice in state warehouses that the ministry has said it plans to sell in quantities of between 1,000 and 6,000 tonnes.
"We'll have to see how smoothly this auction goes and then we will see whether we will hold the next one and when," Chutima Bunyapraphasara, the Commerce Ministry's permanent secretary, told reporters.
The ministry did not say when the sale would be approved.
The government is looking to dispose of huge rice mountains following the end of the support scheme introduced by the government of former prime minister Yingluck Shinawatra.
Ms Yingluck was banned from politics for five years in January after the National Legislative Assembly found her guilty of mismanaging the scheme. The government claims the scheme incurred losses of US$16 billion.
Thailand, the world's second-largest rice exporter after it lost its crown to India last year, has about 13 million tonnes of rice in storage.
About 6 million tonnes in government warehouses is below standard or rotten and classed unfit for human or animal consumption, the Commerce Ministry said last month.
Since taking power in 2014, Thailand's military government has auctioned off 5 million tonnes of rice through several tenders, with sales worth about $1.5 billion.