After 30 percent slide, Asia rice could find floor

By Apornrath Phoonphongphiphat - Analysis

BANGKOK (Reuters) - Asian rice prices have tumbled even faster than they surged to record highs earlier this year, but the nearly 30 percent slide will soon end as a Thai government price-support scheme is about to kick in.

Even bumper crops in leading producers and renewed exports from Vietnam and Cambodia are unlikely to force benchmark Thai rice prices much below $700 a tonne, the price at which Bangkok has agreed to buy supplies from farmers. That's down from a record $1,080 in April, but still double its $383 in January.

After six months of exceptional volatility, a return to the price stability that characterized the thinly traded rice market for most of the past three decades would be a relief to policy makers and governments fighting food inflation worldwide, and anxious about the security of supplies.

"Prices have weakened but I don't expect a big slide from current levels. We should not forget the Thai intervention program," said Vijay Iyengar, managing director of Agrocorp International, a Singapore-based commodities trading firm.

Prices have eased significantly in recent weeks as the world's biggest importer, the Philippines, has completed its buying for the year and leading producers have planted additional crops to cash in on very high prices.

But as governments rush to maintain higher grain stockpiles and as crude oil surges, making everything from diesel to fertilizer more expensive for farmers, industry experts suggest rice prices would not return to the $300-$350 range of 2005-2007.

PRICE OUTLOOK

Going back over two decades, rice prices have rarely moved outside the $200-$300 a tonne range.