Rice exporters have agreed to buy an additional 100,000 tonnes of Thai Hom Mali rice in a joint move to shore up the price of the fragrant grains.
Thai Rice Exporters Association president Charoen Laothammatas said the purchase worth about 2.4 billion baht aimed to take supply out of the market and raise Hom Mali rice to the target price of 26,000 baht per tonne.
The rice price has dropped sharply from the target price jointly agreed by exporters and the Commerce Ministry to 24,000 baht a tonne.
The fall was partially due to simultaneous harvests nationwide and relatively high moisture.
In a move to stabilise Hom Mali paddy prices, exporters pledged last month to buy the paddy at a target price of 13,500 baht a tonne or about 26,000 baht a tonne for milled rice from December to February.
Commerce Minister Apiradi Tantraporn said exporters would buy the extra 100,000 tonnes of Hom Mali rice and keep it at their warehouses for three months from January to March.
Mr Charoen forecast Thailand would produce 6.5-7 million tonnes of Hom Mali paddy or 3 million tonnes of milled rice in the 2015-16 season, close to last season's figures.
He believes Hom Mali prices have hit bottom now that most grains are no longer held by farmers but owned by rice mills.
Mr Charoen said Hom Mali export prices had stayed relatively low this year because of the baht's weakness. The baht has averaged 36 against the US dollar compared with 32 in the same period last year. Export prices of Hom Mali are now quoted at $720 a tonne against $800 last year.
Mr Charoen expects Thailand to end this year with shipments of 9.5 million tonnes of rice after exporting nearly 11 million tonnes of rice last year, up 66% from 2013. Export value rose by 23% last year to $5.43 billion. He said this year's export value was expected to drop by 10% because of the baht's slide.