Thai rice prices have soared to a two-year high on anticipated lower supply in light of widespread drought conditions.
According to Chookiat Ophaswongse, an honorary president of the Thai Rice Exporters Association, prices for all types have risen. The price for 5% white rice is quoted at US$424 a tonne, up from $397 in April, and the price for glutinous rice is quoted at $900 a tonne, up from $867 last month.
The free-on-board export price for Hom Mali fragrant rice remained stable at $795 a tonne.
Mr Chookiat said a surge of glutinous rice in particular had acted to lower domestic production as Thai farmers shifted to growing more Hom Mali rice due to higher demand from China, as well as Indonesia and Malaysia ahead of Ramadan.
The Islamic fasting month begins June 6 and continues for 30 days until July 5.
Commerce permanent secretary Chutima Bunyapraphasara said rice prices are in a rising trend because of lower global supply and the drought, which is expected to batter two major rice producers, India and Vietnam.
She said the extent of the price increases would depend on the impact of drought conditions in those countries.
In a related development, thanks to anticipated lower supply, the government's latest rice auction for 1.2 million tonnes drew active participation from potential buyers.
Duangporn Rodphaya, director-general of the Foreign Trade Department, reported yesterday that there were 51 qualified bidders.
The department will announce the results tomorrow (May 19).
The rice put up for the latest auction was part of an existing 11.4 million tonnes in state stocks. The National Rice Policy Committee, chaired by Prime Minister Prayut Chan-o-cha, had greenlighted the rice for auction late last month, following a proposal by the Commerce Ministry. The rice is projected to fetch at least 100 billion baht.
The 11.4 million tonnes is a mix of Grade C, which is categorised as substandard quality for industrial use; Grade P, which passed ministry certification; and Grades A and B, meaning in slightly poor condition and in need of sorting for improvement.
The sales plan mainly entails general auctions on a warehouse basis. It is divided into three categories based on the percentage of Grade C rice in the mix in each warehouse.