* Traders say Thailand must cut prices to secure sales
* Thai sales would further pressure world grain market
* Govt to sell both milled and unmilled rice
* Thailand to seek government rice sales
(Adds comments from Manila)
By Apornrath Phoonphongphiphat
BANGKOK, July 10 Thailand plans to start selling
rice from government stockpiles next week, offloading up to 1.5
million tonnes a month for the rest of the year, but traders
said it would have to slash prices and accept big losses in
order to move the grain.
World prices have fallen due to expected bumper crops and
high stockpiles and Thai sales would put even more pressure on
Global production could rise 1.9 percent to a record 479.2
million tonnes of milled rice in the next 2013/14 crop, the
United State Department of Agriculture (USDA) said.
Thai officials estimate stocks at 17 million or 18 million
tonnes, or almost double the export volumes of a normal year.
"It's a good time to start selling stocks, as we see rising
demand for several grades of rice," Commerce Minister
Niwatthamrong Bunsongphaisan told reporters.
He said the government aimed to sell up to 1 million tonnes
of milled rice per month and another 500,000 tonnes of paddy. It
also planned to sell an unspecified amount on the Agricultural
Futures Exchange of Thailand (AFET).
Last year, the Thai government said it had sold 7.3 million
tonnes to foreign governments for delivery over several months
into this year, but the purported buyers denied the deals and
activity at ports did not suggest such large-scale loading.
Traders said the Thai government would have to accept huge
losses if it wanted to release stocks to get fresh funding for
its intervention programme, which helped win the votes of
millions of farmers and carry it to power in 2011.
"Bidding prices are expected to be really low and the
government has no choice, except to cut prices, if it really
wants to offload the rice," said Rakesh Sodhia of Fortuna
International Ltd in Bangkok.
The government has estimated it suffered losses of 136
billion baht ($4.33 billion) from the scheme in 2011/12 but even
that was based on getting prices for remaining stocks that now
seem wildly unrealistic.
"Prices will drop as supply is rising everywhere. India,
Thailand and Vietnam are about to harvest their 2013/14 crop in
the second half of this year but demand is steady," said Sompong
Kitireanglarp, president of Thai exporter Ponglarp Co Ltd.
THAILAND TO SEEK GOVT SALES
Niwatthamrong was appointed in a cabinet reshuffle at the
end of June, when his predecessor lost his job over losses that
had piled up under the intervention programme and his failure to
be open about costs and how much rice was sold.
The new minister is to visit several countries that have
pacts with Thailand on rice sales, to discuss new deals. "The
countries I plan to visit are Indonesia, Iran, the Philippines,
Malaysia, China and Singapore," he said.
Indonesia, a big buyer that is trying to become
self-sufficient, said it could import up to 600,000 tonnes of
rice this year depending on local output, stocks and prices.
Jakarta normally buys from Vietnam, whose rice is cheaper.
The Philippines, which aims to be self-sufficient in rice by
the end of 2013, said it had no plan to buy more through the
National Food Authority.
"Thailand has approached the NFA for a
government-to-government deal. But for this year the NFA has no
plans of buying more after our deal with Vietnam," a spokesman
told Reuters. "And we're not sure if we need to import rice for
Vietnamese 5 percent broken rice stood at $370 to $385 a
tonne on Wednesday against $475 for the same grade from
The Thai rice cost $520 a tonne at the end of June and fell
sharply when the government announced a cut in the intervention
price it pays to farmers. The price stuck near the lower levels
even when the government did an about-turn and reinstated the
original purchase price after protests from farmers.
The government pays 15,000 baht ($480) a tonne for rice, a
figure traders estimate is 40 percent above the market price.
Milling, storage and other costs suggest the government would
need to get about $700 a tonne to break even.
($1=31.3050 Thai baht)
(Additional reporting by Nguyen Phuong Linh in Hanoi, Michael
Taylor in Jakarta and Enrico Dela Cruz in Manila; Editing by
Alan Raybould and Clarence Fernandez)