News Column

Exporters in price impact plea

August 25, 2014

By Phusadee Arunmas, Bangkok Post, Thailand

Aug. 25--The new government is being urged to help support rice exporters to secure more futures contracts, particularly for the new harvest to help curb a fall in prices.

Separately, rubber planters are also calling for help from the government as they feel the impact of significant price drops of the commodity in recent years.

"Thai rice exporters have been travelling overseas to sell Thai rice on futures contracts to prevent a drop in prices. Malaysia is interested in buying more rice from Thailand, but wants appropriate offer prices in advance, particularly for newly harvested rice," said Chookiat Ophaswongse, honorary president of Thai Rice Exporters Association. The new harvest for the main crop will be churned out from October onward.

Under the exporters' proposal, they will buy newly harvested rice from the market for delivery under the futures contracts. But if prices fall below the future prices before delivery, they call for government compensation of state rice stocks.

"We're not asking for money, but rather compensation of rice stocks or a discount once we buy rice from state stocks," said Mr Chookiat.

He said there was plenty of demand for new rice, not only from Malaysia but also Indonesia and China. Exporters expect to sell 400,000 to 500,000 more tonnes if authorities agree on this proposal.

Sermsak Kuonsongtum, the association's vice-president, said Indonesia's rice-buying agency, Bulog, wanted 300,000 to 500,000 tonnes of new rice from either Thailand or Vietnam, while China was asking for about 100,000 tonnes. The association is teaming up with the Foreign Trade Department to sell Thai rice, he said.

The global rice market received a jolt a couple of weeks ago when the junta decided to auction off the 167,000 tonnes of rice the government stockpiled over the past two years during the expensive rice pledging scheme. Although the bidding drew an active response from bidders, the military regime only sold 73,000 tonnes for 740 million baht. A second auction is expected later this month for 200,000 tonnes, with possible amendments to the bidding process to entice potential buyers.

In a related development, Jintana Chaiyawonnagal, director-general of the Internal Trade Department, said to cope with low paddy prices the department also plans to ask local millers to keep their rice stocks during the seasonal harvest. Participating millers will be offered a special loan that charges three percentage points below the minimum lending rate for six months.

Paddy rice production for the 2014-15 second crop is estimated at 28 million tonnes, while output for the 2015-16 main crop is estimated at 26-27 million tonnes.

In the meanwhile, associations representing rubber planters in 63 provinces are due to meet their governors today to pass their request to the new cabinet for the government not to sell 210,000 tonnes of rubber in its stock to the market in help avoid further price falls.

The stock has also lessened the bargaining power of Thai sellers in the global market, they said. The government should instead use the stockpile for road construction, futsal pitches and kindergarten playgrounds.

Rubber prices have dropped sharply from a peak of 172 baht a kilogramme in February, 2011 to 91 baht per kg in 2012 and 75 baht in 2013 on average. Last week, unsmoked rubber sheet dropped to only 50 baht per kg. The Rubber Research Institute of Thailand expects prices to continue to drop with falling oil prices and weak markets in China and the euro zone.

Related search: commodities, rice


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Source: Bangkok Post (Thailand)

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