Asian rice markets slow due to poor demand

Trading on Asian rice markets was slow this week due to a lack of demand, with prices in Thailand stable but the Vietnamese market hitting multi-month lows after the official floor price was cut, traders said on Wednesday. Buyers may not return to Vietnam until early next year before the country begins harvesting its main crop in March, while traders in Thailand said buyers there were waiting for new sales from the government's huge stocks of an estimated 18 million tonnes.

Thailand and Vietnam together account for 40 percent of the world's rice trade. Just a tenth of Thailand's huge stockpiles built up under a government ousted in May is of standard export quality, while the rest is either inedible or deteriorating. Thai 5 percent broken rice was quoted at $410 a tonne on Wednesday, free on board (FOB), leaving it down 2.4 percent so far this month under pressure from the government stocks.

"The government should really focus on selling rice from its stockpiles," one Thai trader said, although he noted that Africa was the only market for the old rice, while countries in the Middle East and Asia always asked for fresh grain. Vietnam's 5 percent broken rice fell nearly 5 percent in the past week to $390-$395 a tonne, the lowest since April 7, after the floor price for the 25 percent broken grain was cut to $380 a tonne.

This is the first time in more than three months that Vietnamese prices have dropped below those of Thai grain. Buyers were turning to Pakistan, while China was slowing its purchase from Vietnam, which has added to the downward pressure on Vietnamese prices, traders in Ho Chi Minh City said.

Vietnam exported an estimated 6.09 million tonnes of rice in the first 11 months of the year, down 1.8 percent from a year earlier, the General Statistics Office said on Wednesday. Its estimate is slightly above that of the agriculture ministry at 6.03 million.

Thailand could export 10 million tonnes of rice this year, far ahead of Vietnam's projected shipments of 6.3 million to 6.5 million, according to traders' estimates. Thai Prime Minister Prayuth Chan-ocha will visit Vietnam on Thursday to discuss support measures for rice and rubber with top Vietnamese government officials, the Thai government said on Tuesday.

Copyright Reuters, 2014