Asian rice costs will keep slumping from near a six-year low as Thailand clears out record stockpiles, threatening a price war with Vietnam and India.
The government plans to sell about 1 million metric tons a month, compared with average monthly exports of 558,000 tons last year. The nation’s benchmark price, which is already below costs in Vietnam and India, may retreat 11 percent to $350 a ton by May, the Thai Rice Exporters Association forecasts.
Thailand accumulated reserves under a state-buying program which ended this year amid a political crisis in Southeast Asia’s second-largest economy. Its stockpiles reached 12.8 million tons in 2013, or about a third of the global export market. Vietnam’s Minister of Industry and Trade said this week that Thailand was willing to sell the grain at any price.
“We could see a price war, with Vietnam cutting prices, selling lower than Thai rates,” said Chookiat Ophaswongse, an honorary president of the Thai Rice Exporters Association.
The 5-percent Thai broken white grade, used as a reference price in Asia, tumbled 30 percent to $394 in the past year, according to data compiled by Bloomberg. Thai grain is currently quoted at about $365 to $370 a ton, lower than $385 in Vietnam and $420 in India, said Chookiat. His forecast for $350 would be the lowest since December 2007.
Cheaper rice may contribute to lower food costs, helping to damp inflation across Asia, where billions depend on the staple. Global food prices tracked by the United Nations fell 2.1 percent in the past year. Thailand, India and Vietnam, the three biggest shippers, accounted for 62 percent of the rice trade last year, the U.S. Department of Agriculture estimates. Rice is falling as wheat in Chicago rose 11 percent this year.
‘Cheaper rates’
“Now that Thailand is selling from government stockpiles at cheaper rates, trade inquiries have stopped,” said B.V. Krishna Rao, managing director of Kakinada, Andhra Pradesh-based Pattabhi Agro Foods Pvt., India’s largest exporter of non-basmati rice. “India’s export price needs to be dropped by $20 a ton to be competitive against Thailand.”
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