World rice prices have risen slightly in the past four months, but any significant government sales risk "destabilising" world markets, the World Bank says.
In a report released Thursday Thailand time, the Bank notes that the price of rice on world markets has risen one per cent in the past four months, and five per cent in the past year.
By contrast, all other major crop prices have fallen, and food costs overall are down four per cent since October, led by wheat (down 11 per cent) corn (six per cent) and sugar (10 per cent).
But the World Bank's Food Price Index, published three times a year, focussed particular concern on the government's rice-purchase programme.
It estimates that the government currently stockpiles 12 million tonnes or rice, equivalent to a third of the entire world trade in the grain.
"A drawdown in Thailand's accumulated stockpiles ... into international markets might have potentially destabilising effects," the report says. (Continued after the photo)
Warehouses have almost a two-year export supply or rice, but more supplies arrive constantly, fresh from the fields. (EPA photo)
The Food Price Index did not explain the statement. But the World Bank said last December that the cost of buying and storing rice from farmers had cost "about 5 per cent of gross domestic product (GDP) in 2012" and could cost another $5 billion (146.3 billion baht) this year.
Samarendu Mohanty, a senior economist at the Manila-based International Rice Research Institute (IRRI), told Reuters on Wednesday that although rice consumption in 2013 should remain strong, global rice prices would fall if Thailand offloaded stocks.
Kiattisak Kalayasirivat of Novel Agritrade in Bangkok warned prices could drop by $20-$30 a tonne if Thailand sold stocks, although demand from Africa or China would likely provide support.
On the other hand, significant sales from the stockpiles would return Thailand to the top position of world exporters. The country sold enough rice in January and February to regain the No 1 spot so far.
A report by the Reuters service on Wednesday said that Thailand "is set to sell half a million tonnes of rice on world markets at a loss".
It quoted Thikumporn Nartworathus, deputy director of the foreign trade department of the Commerce Ministry, as saying the sale of old rice would be completed next month.
"We accept that some of the rice is from the previous crop which is quite old and the quality is not very good, so it's impossible to ask for very high prices," Reuters quoted Mr Thikumporn, who said sales would be via tender or government-to-government deals.
The Pheu Thai Party's rice-purchase scheme is attracting increasing international attention.
This week, at a World Trade Organisation meeting in Washington, US officials asked Thailand whether stocks were being exported or used domestically. The US charged Thailand has removed previously public records on rice stocks and sales from government websites.
"Canada, the United States and Australia urged Bangkok to come back promptly" with an answer to the US questions," Reuters said. "The European Union also said it was concerned."
Overall, the World Bank report said, global food prices have declined in recent months as lower demand for cereals and improved supplies pushed prices down.
The poverty-fighting institution said lower demand from a sharp fall in the use of wheat feed and declines in corn consumption for ethanol in the United States has pushed prices down. Favourable weather conditions in some regions have also raised hopes of better crop supply for 2013.
However, global food prices remain only 9 percent below the all-time high recorded in August 2012, the World Bank said.