News Column

'Flexible' rice sales call

August 14, 2014

By Phusadee Arunmas, Bangkok Post, Thailand

Aug. 14--Authorities are preparing to propose that the junta amend certain conditions concerning the auction of state rice stocks to make it more enticing to potential buyers.

The proposal came after the government failed to sell all the rice it put up for general auction last week.

The National Council for Peace and Order last Thursday put 167,000 tonnes of rice from state stocks up for auction, the first lot to go under the hammer since sales were halted when the military took control on May 22.

The bidding drew an active response from potential buyers, but managed to secure deals for only tens of thousands of tonnes. More details are not yet available.

Authorities put the failure down to the relatively low offers proposed by bidders.

Duangporn: The government will ensure grain quality..

Last week's auction drew 46 small, medium-sized and large exporters, millers and rice packers, but most of them proposed buying prices below the floor prices set by the panel handling rice sales.

Under the current floor price condition, the panel has imposed only floor prices. The figures were not disclosed.

Duangporn Rodphaya, director-general of the Foreign Trade Department, said Wednesday the panel handling rice sales will be asked to amend the condition to "a price range" basis to make it more flexible.

She also insisted the government will sell the stocks with no mixture with low-quality grain.

Charoen Laothamatas, president of the Thai Rice Exporters Association (TREA), said most bidders last week offered prices which were deemed reasonable and close to market prices.

For instance, he said, the bidders offered to buy Hom Mali fragrant rice at 28.50 baht per kilogramme which is much higher than 23-25 baht sold during the previous government, while offers for white rice were 11-11.50 baht per kg compared with 8-9 baht.

"The offers are considered realistic enough, as the rice put up for auction is sold at the ex-warehouse price in which the buyers have to bear the cost of transportation, sacks and labour," he said. "Moreover, the bidders have to pay withholding tax at 1% of the value of the rice they buy plus export tax at 0.75% of the export value if the grain is slated for exports."

According to Mr Charoen, during the period that the government failed to sell off its rice stocks the overall rice market is expected to become sluggish over the next couple of days.

He said another contributing factor is Vietnam's tightened control on its cross-border shipments to China to prevent rice smuggling, causing Vietnam's prices to significantly drop.

Vietnam's 5% white rice is now quoted at only US$450 a tonne, almost equivalent to the prices of Thai white rice.

The country exported 3.62 million tonnes of rice in the first seven months of the year, down from 4.06 million tonnes in the same period last year, according to the Vietnam Food Association.

In contrast, Thai exports were up 60% at 4.7 million tonnes in the first six months compared with the same period last year, according to the Thai Rice Exporters Association.

"The market changes very fast, we need to wait and see how the military administration handles the rice sales."

Mr Charoen said the Philippines is also due to call a bid to buy a new lot of 500,000 tonnes of 25% white rice on Aug 27, while Malaysia wants to buy an additional 200,000 tonnes of rice and Indonesia needs at least 200,000 tonnes.

The junta last month vowed to sell an average of 500,000 tonnes a month from existing state stocks and dispose of the existing 18-million-tonne surplus within three years through four channels.

Those channels are general auctions, government-to-government sales, direct sales and via the Agricultural Futures Exchange of Thailand.


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Source: Bangkok Post (Thailand)

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