The Agricultural Futures Exchange of Thailand (AFET) will propose the Commerce Ministry use it for rice auctions bought over a year ago under the government's rice-pledging scheme as a way to release huge stockpiles.
AFET successfully auctioned 600,000 tonnes of government rice four years ago, and the government's stock greatly exceeds that figure, said Prasat Kesawapitak, AFET's chairman.
An unnamed source said rice traders and the Commerce Ministry urged AFET to propose the idea to help the government release stock and set a futures reference price for the grain.
Since the Yingluck Shinawatra government kicked off the rice-pledging scheme in 2011, there have been no trading activities and no price reference for rice futures, because the pledging price is much higher than the market price and world price, the source said. The pledging price is 40-50% higher than the global price.
Six products are available on the AFET: Ribbed Smoked Rubber Sheet No. 3 (RSS3), Block Rubber STR20 (STR20), White Rice 5% FOB (WRF5), Thai Hom Mali 100% Grade B Both Options (BHMR), Tapioca Chip Both Options (TC) and Canned Pineapple (CPPL).
Only RSS3 sees active trading, but a volume of around 200 contracts per day is minimal as the world economic quagmire and Chinese slump have reduced demand.
AFET is trying to increase trading liquidity by offering new small contracts for tapioca aimed at retail investors. Contract details will be announced next month.
AFET also plans to add pineapple juice to the market as demand is higher than for canned pineapple. The new product is expected to be announced for market trading soon.
The market signed a memorandum of understanding (MOU) yesterday with Zhengzhou Commodity Exchange (ZCE) to cooperate on knowledge transfer, rules and regulations and technology for futures trading.
ZCE trades 11 products, with cotton futures the most active, exceeding 10,000 contracts per day. ZCE signed MOUs with 14 other exchanges worldwide, include giant commodities markets such as the Chicago Mercantile Exchange, Tokyo Grain Exchange, and NYSE Euronext Group.
Fan Zhang, chairman of the board of ZCE, said though China's economy is slowing down this year, investment is still active and Chinese people have high purchasing power.