Rice PricesBy Bangkok Pundit Feb 19, 2009 12:05AM UTC
A delegation from Thailand, the world’s biggest rice exporter, is asking Vietnam to help it stabilize the tumbling price of rice – the latest indication of how agricultural markets have changed in the months since riots over food costs gripped parts of the developing world.Industry experts aren’t expecting any major price-fixing accords between the two countries, which together control about 45% of global rice exports.…He said the two sides hoped to announce increased coordination at a summit of leaders of Association of Southeast Asian Nations at the end of February in Thailand. One idea on the table is the creation of a regional rice reserve that could be used to prevent food shortages and absorb excess stocks during periods of oversupply, analysts say.“We have to stabilize the world price,” said Chookiat Ophaswongse, president of the Thai Rice Exporters Association and a participant in the Vietnam meetings. If the effort isn’t successful, he said, “it’s going to hurt the overall market.”…The price of Thai rice, a global benchmark, has dropped to about $600 a ton from nearly $1,000 in May. Rice prices in Thailand probably would have fallen further, analysts say, without a government program that buys excess supplies from farmers. In Vietnam, which doesn’t have such a program, prices have fallen to about $450 a ton.
Deputy Commerce Minister Alongkorn Ponlaboot, accompanied by representatives from the Thai Rice Exporters Association and Thai Farmers Association, are in Vietnam from today to Wednesday to discuss the issue with the deputy trade minister and the Vietnam Food Association.According to Mr Alongkorn, Thailand and Vietnam, which account for up to 50% of the world’s rice exports, should work closely together to stabilise prices.‘‘Thailand and Vietnam should jointly set strategic rice prices that will be used as the world’s rice reference prices,” he said. ”For instance, we may set the rice export prices together at no less than US$700 per tonne which reflects production costs and a certain rate of profit to make it fair to farmers who are mostly still poor.”Thailand and Vietnam export about 15 million tonnes each year, 8-10 million tonnes from Thailand and the rest from Vietnam. The global rice trade averages 30 million tonnes a year.However, Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said an agreement was unlikely to materialise as Vietnam’s rice market is controlled by a socialist government.”In our visit last November, we proposed Vietnamese exporters bump up the minimum export price by another $50-60 per tonne to shore up prices, but they said they could not do that as everything is the government’s decision,” said Mr Chookiat.”The negotiation should be done on a step-by-step basis, focusing first on the joint agreement on rice production control in each country. Once the supply of each country gets too big, it will be tough for any talks, as each will need to rush to dispose of its stockpiles.”Thai white rice cound not compete with Vietnamese grain now, as Thai government intervention has made rice prices relatively high. Benchmark 100% B grade white rice is quoted by Thai exporters at US$610 per tonne, $170 higher than that from Vietnam.According to Mr Chookiat, Thai rice exports will probably be lower than 600,000 tonnes in February.
BP: Wonder how much the farmers are getting as they may have a political affect over time i.e bad prices under the Democrats and little price support won’t help the coalition in the Northeast.
btw, note just like his upcoming visit to the US, it is the Deputy Commerce Minister who does the meet and great. The Commerce Minister is shut out of any meetings. This is actually a good thing, but it is becoming very noticeable.