The Thai government is poised to boost rice sales from record state stockpiles to fund a buying program from farmers, hurting prices of the grain this quarter, according to a shippers’ group.
Prices of Thai 5-percent broken white rice may plunge to $370 a metric ton as the government seeks to generate cash to appease farmers, said Chareon Laothamatas, president of the Thai Rice Exporters Association. That would be the lowest price since December 2007, according to the Rome-based Food and Agriculture Organization. The grade was at $456 today.
The program is a centerpiece of Prime Minister Yingluck Shinawatra’s caretaker government, which is under pressure from protesters demanding her administration be replaced by an unelected council. Farmers have not been paid for crops sold to the government under the program, which has spurred record reserves. China’s Heilongjiang province canceled a rice purchase as confidence was hurt by an anti-corruption probe, Deputy Prime Minister Niwattumrong Boonsongpaisan said yesterday.
“There is no magic pill to wipe away stockpiled rice,” Chareon said in an interview in Bangkok today at an event organized by the group, which forecasts that state stockpiles will rise to 20 million tons. “It may take about five years to get rid of these stockpiles. The government needs to sell the grain at attractive rates and cut new supplies.”
The price of Thai 5-percent broken white rice, a benchmark grade for the staple for half the world, slumped 30 percent after reaching a three-year high in 2011, when Yingluck’s government introduced the purchase program to try to lift prices and rural incomes. Anti-government protesters led by Suthep Thaugsuban have said the program is corrupt while seeking to overthrow Yingluck’s administration with months of rallies in Bangkok and attempts to disrupt elections held on Feb. 2.
Rice exports from Thailand may surge 13 percent to 7.5 million tons this year, according to a forecast from the shippers’ group. That would be the highest level since 2011, when the rice exports reached their peak.
“Prices may plunge to $370 a ton in the first quarter as the government is in a rush to sell,” said Chareon. “Concerns over the quality of rice in the state stockpiles are also weighing on Thai prices.”
Yingluck’s administration is seeking to borrow 130 billion baht ($4 billion) to pay farmers for harvests in the current crop year that started October after spending almost 689 billion baht in the past two years to buy the grain. The program will run until the end of February, leaving a new government to decide on rice policy, according to the caretaker government.
The government will invite bids for about 400,000 tons and will continue to sell from the stockpiles, Niwattumrong said yesterday. The Finance Ministry is finding it difficult to raise funds to make subsidy payments to farmers because of pressure from anti-government protesters, Permanent Secretary Rungson Sriworasat told reporters Jan. 3.