(Removes extraneous word in headline)
* Thailand signs rice export MoU with China
* Exports unlikely on higher Thai rice prices
* China seen buying 2 mln T of rice in 2012/13
By Apornrath Phoonphongphiphat
BANGKOK, Nov 21 Thailand's pact with China to
sell rice looks more political than any real opportunity to
cut into the huge stockpiles of subsidised grain that are
pricing the Southeast Asian producer out of the international
rice market it has long dominated.
Under the memorandum of understanding, signed during Chinese
Premier Wen Jiabao's visit to Bangkok on Wednesday, China can
import Thai rice if it wants to. But it did not agree any actual
The agreement comes just after a regional summit in Cambodia
which Wen attended and appears to be a clear attempt by China to
curry favour with Thailand.
"The Thai government wants people to believe something is
happening and they also desperately want exports to take place,"
said a trading manager at Singapore-based international
commodities trader. "We are very sceptical."
The government is struggling to offload a record 14 million
tonnes of rice and is scouring the country for more storage
space after Prime Minister Yingluck Shinawatra extended the rice
subsidy scheme - aimed at the small-scale farmers who helped
vote her into office last year - into the new season beginning
The scheme has made Thai rice nearly a third more expensive
than grain from rivals Vietnam and India and threatens to take
away its status as the world's biggest rice exporter.
A Thai official said the cabinet had approved a framework to
sell up to 5 million tonnes of rice within 3 years if China
wanted to buy.
"The MOU with China is not a contract to sell," said
Thikamporn Nartvoratat, deputy director general of the Foreign
Trade Department. "We need to negotiate prices and quantity
again if China wants to buy."
Thailand is paying farmers 15,000 baht ($490) a tonne for
paddy, far above the estimated market price of around 9,000
Thai exporters said the agreement with China could have more
to do with their government's attempts to counter a planned
parliamentary censure debate over the issue by showing it is
managing the problem well.
"It's just a political move," said a Bangkok-based trader.
"The government wants to show it can handle the stocks even
though it can't sell any rice via government deals."
The Democrat Party will open a censure debate this weekend
against the government when its rice policy is expected to come
under sharp attack.
Though the government is unlikely to lose the debate because
of its big majority, the opposition is expected to make damaging
accusations about corruption and waste. The debate will be aired
on television and it could be embarrassing for the government.
China, the world's biggest producer and consumer of rice, is
forecast to import 2 million tonnes in the year to September
2013, according to the China National Grain and Oils Information
Center. The bulk of that is expected to come from neighbouring
"It will be cross-border trade between China and Vietnam as
it has been in the past for whatever rice China needs," said
Vietnamese rice prices softened this week on lack of demand,
traders said. The 5-percent broken rice slid to $445-$455 a
tonne, free-on-board Saigon Port, from $450-$460 last Wednesday.
This compares Thai 5 percent broken rice quoted at $550 a tonne.
Thai officials have made claims in the past of selling rice
to top buyers but importers have denied making any such deals.
The government has sold only small lots. The Ivory Coast
bought 240,000 tonnes, while the results of a tender to sell
586,000 tonnes have yet to be announced.
In September, Thailand's commerce minister, Boonsong
Teriyapirom, said the nation had signed contracts to sell 7.3
million tonnes of the stockpiled grain which were promptly
denied by Indonesia and the Philippines.
(Reporting by Niu Shuping in BEIJING, Writing and additional
reporting by Naveen Thukral in SINGAPORE, Editing by Jonathan