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India rice prices slip as demand dips; domestic buying props up Thai rates

(Reuters) - Rice export prices in India eased from multi-month highs this week due to weaker demand, while domestic buying pushed up rates in Thailand.

Women plant rice saplings at a paddy field in a village in Nagaon district, in the northeastern state of Assam, India, July 3, 2018. REUTERS/Anuwar Hazarika/File Photo

Top exporter India’s 5 percent broken parboiled variety was quoted around $390-$393 per tonne, down from the previous week when prices rose to the highest level in more than seven months at $392-$395.

“Buyers are waiting for a price correction,” said an exporter based at Kakinada in the southern state of Andhra Pradesh.

“Exporters can’t reduce prices due to the strong rupee and higher paddy prices.”

Last week’s price rise was attributed to an appreciation in the rupee, which lowers returns from overseas sales.

In Thailand, benchmark 5 percent broken rice prices rose to $400-$404 a tonne, free on board Bangkok, on Thursday, from $390-$393 last week.

Traders said the price rise was due to higher domestic demand, even as overseas demand remained flat.

“Prices were very low last week, so there were some purchases in the country and now prices have bounced a little,” said a Bangkok-based trader.

Last week, the Thai cabinet agreed to extend a rice trading agreement with the Philippines, which expired in December, for another two years. The agreement allows Thailand, the world’s second-largest rice exporter, to take part in tenders issued by the Philippines and states that the two countries can trade up to 1 million tonnes of rice per year.

In Vietnam, rates for 5 percent broken rice were unchanged from last week at $360 a tonne.

“Activity is slowing down this week on weaker demand,” a trader based in Ho Chi Minh City said.

“Buyers from the Philippines, our key market, said they have signed enough deals for the near term and don’t plan to buy more for now,” the trader said.

Buyers from China held a meeting with commodity traders in Ho Chi Minh City on Thursday to explore trading opportunities, but no major rice deals were made, another trader said.

Meanwhile, Bangladesh’s rice production is expected to rise 7 percent to 34.9 million tonnes in the year to April from the corresponding period last year, due to higher acreage and yields, the U.S. Department of Agriculture (USDA) said.

Bangladesh, traditionally the world’s fourth biggest rice producer, was forced to massively increase imports to shore up domestic reserves in 2017 after floods wrought havoc on local crops.

Reporting by Rajendra Jadhav in Mumbai, Patpicha Tanakasempipat in Bangkok, Khanh Vu in Vietnam, Ruma Paul in Dhaka; editing by Arpan Varghese and Kirsten Donovan