Rice tumbles as Thailand releases stockpile

SEOUL (Reuters) - U.S. rice futures extended their overnight losses in early trade on Wednesday, with back-month contracts dropping more than $1 per hundredweight, pressured by prospects of increased supply from top exporter Thailand.

Chicago Board of Trade May rice futures fell 1.5 percent, or 34 cents, to $22.25 per hundredweight after falling to as low as $21.695. The back-month January 2009 contract fell 4.6 percent, or 95.5 cents, indicating the longer-term price outlook for the grain has become less appealing.

Thailand, the world's largest rice exporter, said on Tuesday it would gradually release 2.1 million tons of stockpiled rice onto the domestic market and maintain its 2008 export target of at least 9 million tons.

"Rice demand and supply remains very tight and thus this week's fall in price appears to be temporary but the adjustment may last longer than expected," said a trader at Tongyang Futures.

Rice, which rose to an all-time high of above $25 last week on fears of tight world supplies and strong demand, has remained below the 20-day moving average since Tuesday, signaling its upward trend may be near an end, as Asian prices ease ahead of Thai harvests.

Thai rice prices dropped by 1,000 baht to 25,000 baht ($791) a ton after Tuesday's announcement, while talk that the Philippines is likely to pay a lower price than a recent purchase at a May 5 tender for 675,000 tons is letting some steam out of the market.

Other grains traded little changed, with corn for May delivery up 0.1 percent to $5.92 per bushel and May wheat down 0.06 percent to $7.93-½ per bushel.

Corn prices, which have been bolstered by delays in U.S. planting due to cool and wet weather, capped the upside on ideas that U.S. corn-based ethanol mandates may be frozen as the country tries to hold down food inflation.

Wheat futures continued their slide after hitting a five-month low on prospects of rising global supply.

(Reporting by Miyoung Kim; Editing by Keiron Henderson)