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Govt rules outs selling rice from state stockpile


April 7, 2008

Govt rules outs selling rice from state stockpile

Thailand has ruled out selling some of the 2 million metric tons of the grain it has stockpiled as global prices rise to records, reported Bloomberg news.

Rice supplies, however, will increase in the coming months as about 6 million tons of milled rice enters the market from the nation's April-June harvest, Bloomberg quoted Thai Commerce Minister Mingkwan Sangsuwan as saying.

“There is enough rice supply for domestic consumption'', said Mingkwan, adding that, “The current shortage has been caused by some hoarding and panic buying on concern the price will rise further.'' There is no need to reduce exports.”

Mingkwan, who met with traders and government officials Saturday, had earlier proposed selling 200,000 tons of stockpiled milled rice to increase local supplies.

Chookiat Ophaswongse, president of Thailand's Rice Exporters Association, said after the meeting that the government should cap rice exports at 900,000 tons a month to prevent potential domestic shortages.

The Southeast Asian nation, which is the world’s largest rice exporter, may be able to deliver as much as 1.2 million tons of rice a month, Prasert Gosalvitra, head of the rice division of the agriculture ministry, said in an April 4 interview with Bloomberg. Thailand has shipped about 1 million tons a month this year, according to traders.

The country's rice shipments may drop in the next few months because exporters are reluctant to take large advance orders on concern they could miss out on further gains in prices, Intertrade's Laomoraphorn said.

Kasikorn Research Center (KRC), the research arm of Kasikorn Bank, meanwhile, has urged the government to amend rice production and marketing plans.

There were signs of rice price volatility in the global market when Vietnam and India, the world's second and third largest rice exporters, re-entered the world market, said a report issued by KRC.

Both Vietnam and India have faced unfavorable crop supply and restricted their rice exports, causing a tight supply of rice on the global commodity market. Long term planning with flexibility able to cope with changes in rice prices on the world market was necessary for the Thai government in reviewing rice production and marketing structures, said the report.

It was expected rice prices would continue to remain high for no less than two or three years and with the limited area of rice fields owned by farmers, it was advisable for them to use innovative technology along with fertilizer and insecticide to boost production, the report added.

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