Weather forecast
Foreign Currency
Gold Price
Classification Gold buy Sale



Are Rice Markets in the Calm Before the Storm? Or, Will Markets Drift Sideways in a Slow Simmer?


Rice markets are quiet with little trading. However under the calm surface there seems to be a bubbling of activity as Asia tries to recover from recent flooding and the U.S. tries to recover from financial market turmoil spurred by uncertainty about Europe.

Rice price indications remain firm but many buyers are holding back for now, waiting for prices to come off. The question is, will this happen and if so when?   The markets are in need of a catalyst to either push prices higher or lower.  Prices are having some trouble rising because they are already at very elevated levels and buyers seem to be sitting on the sidelines for now as the Thai government buys up Thai paddy and Viet paddy is bought up by speculators. This is keeping prices supported as slack supply is bought up, but begs the question about when this will end.   The market could remain in this standoff for a while as sellers wait for buyers to step forward while the buyers wait for the Thai rice buying scheme to fail, Indian rice export logistics to improve, Viet rice hoarding to slow, and prices to come off.  Big buyers including Indonesia and the Philippines will eventually need to buy rice but the issue is timing. 

Vietnam is forecasting a bumper 41 million ton paddy crop in the 2011-12 crop year but expects exports in 2012 to be closer to 7 million tons instead of 7.5 million tons as high prices – blamed by the Thai rice scheme - are slowing Viet rice exports.  Viet 5% milled rice fob is shown around $565- $575, up about $20 from a month ago. 

The Philippines will consider importing rice from origins besides Thailand, the head of the National Food Association (NFA)  - the government agency that imports rice - said today.  “With the way the market has reacted to the Thai rice policy, it is incumbent on us to look at other markets.” The Philippines is in talks with Cambodia and Burma.  The Philippines is expected to raise its 2012 rice import target from 500,000 tons currently after about 600,000 tons of rice, basis milled, was destroyed by the recent typhoons, according to NFA estimates. 

Some analysts are expecting Thai rice to reach $750- $800 per ton as the rice mortgage scheme gets under way, and flood damage reduces the excess supply of rice in Thailand.  Flood losses are estimated at around 2 -3 million tons, basis milled. Thailand has about 5 million tons of old crop in storage, about half of that in private hands. This supply of cheaper old crop is expected to last another several months. The Thai rice buying scheme is only scheduled to last until the end of February, so its impact on prices could be more muted than feared as the government may stop buying paddy about the time that old crop supplies run low.  It’s hard to say if the Thai government will extend the program, or if they can afford to. The government will face increased costs to recover after the devastating floods and the Thai baht may pose a risk to the nation’s inflation level. The Thai rice mortgage scheme is an inflationary policy and added to a weak baht,  that may prove to be a toxic combination. 

With Thai logistics complicated by high waters and the Thai rice mortgage scheme, India was supposed to replace any and all Thai rice exports lost to higher, uncompetitive prices and or floods, but delays in loading are holding back progress and time waiting in ports is driving up demurrage costs, eating away at the discount Indian rice trades at compared Thai, Viet, or Pak rice.  

India’s autumn harvest is expected to produce a record 87 million tons of rice, according to the Farm Ministry. 

India’s agriculture minister today said the nation’s food rations should be reserved only for the “really needy people” warning that if the government could face serious losses on selling food below cost, especially when the government is also considering raising the minimum support price is pays farmers for rice.  He recommended rice, wheat, and coarse cereals be sold around Rs 3 per kilogram, Rs 2 per kilogram, and Re 1 per kilogram respectively.   The minister said that after looking at the repercussions - yes, low and behold selling something below cost will result in financial loss – the government must re-evaluate its strategy; the minister added, “I don’t want the Soviet Russia to happen to this country.”  India’s rice stocks are this spring likely to surpass last spring’s record levels, resulting in a storage crisis if the government isn’t able to move enough grain through consumption or exports. 

India’s Finance Minister expressed concern at a recent G20 meeting that commodity price volatility should be reined in.  While food inflation in India is about 10.6% rice prices are only up about 6.12% from 6 months ago and up about 4.42% from a year ago, mostly because prices last year were already so high. 

While flood damage in Thailand and the Philippines is well covered, floods have also affected rice baskets of Cambodia and Laos.  The Lao Ministry of Agriculture and Forestry is targeting 125,000 hectares of dry season rice crop, yielding about 500,000 ton of paddy, but that may be hard to achieve with Laos’s irrigation systems destroyed by flooding.  In 2011, Laos farmed about 890,000 hectares of rice crop.  The Lao government has set a budget of 25 billion kip (about $3 million) to repair irrigation systems damaged in recent flooding so water can be supplied to crops.  This is after the irrigation section asked for 170 billion kip (about $20 million) to repair systems in 11 provinces. The budget shortfall will have to be made up for by local governments.  Some farmers are choosing to plant cash crops instead of rice to make up for financial hardship from the flooding.  Reduced rice supplies in Laos and Cambodia raise the floor for Southeast Asian rice prices as Thailand and Vietnam miss out on these cheaper supplies to export. 

In the U.S. cash trading remains slow, spreads wide, and the futures market range bound. Chicago rice futures have been hovering around $16.50 per cwt (about $365 per ton) over the last week after recovering from around $15.50 per cwt (about $343 per ton) earlier this month.  Rice futures are likely to be held hostage by world financial markets have been volatile and trendless.  After falling precipitously in August and September, world financial markets have recovered this month on hopes of a European bailout.  However, hopes for a quick fix are all but dashed and now financial markets are also in need of a new catalyst to determine the trend. In the meantime they may just drift sideways.

Custommer Support

  • ViVi Chung

    ViVi Chung


    Mr. Tai

    Mr. Tai


  • Ms. Ngan

    Ms. Ngan


  • ViVi Chung


    Mr. Tai


Hotline: 84-913.848.116

video clip

Counter statistics

  • Online:
  • 1319385Total: