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Thai rice exports may hit 8.3 mmt in 2006
BANGKOK (Dow Jones)
Healthier demand and softening competition from other exporters may lead to Thai rice exports exceeding the government target of 7.5 million metric tons in 2006, a senior industry executive has said.

"I'm confident that we won't see exports (below) 8.3 million tons this year," Managing Director of President Agri Trading Co., Apichat Chansakulporn told Dow Jones Newswires in a recent interview.

President Agri was Thailand's second-largest rice exporter in 2005 after Capital Rice Co., according to the Rice Exporters Association of Thailand. It exported around 760,000 tons of rice in 2005, down from 1.66 million tons a year earlier, data from the association shows.

Apichat said demand from Iran, which returned to the Thai market this year after a brief break last year, will be a key factor in boosting rice exports this year.

Iran which was a major importer of Thai rice in recent years, turned to Vietnam last year, when Thai rice prices rose sharply.

Despite Thai rice prices continuing to be high, Iran has returned to the Thai market this year, said Apichat.

Thai 100% B grade rice was offered Monday at $305-$308 a ton, free-on-board Bangkok, compared with $303-$304/ton a year ago.

"Iran comes back to Thai market after having experienced Vietnamese rice the previous year. I have sold as much as some hundred thousand tons (of rice to Iran) so far this year," Apichat said.

Iran is believed to have made the latest purchase of Thai 100% B grade rice last week at a price of $305/ton, FOB Bangkok, trade sources said.

Apichat said Iran is a tough customer to please, given its stringent demands on quality and specification. After experiencing inconsistency in Vietnamese rice quality, Iran has returned to a "more certain market in Thailand," he said.

"Local consumers in Iran weren't satisfied with Vietnamese rice, given that they are familiar with better quality Thai rice," Apichat said.

According to trade estimate, President Agri has sold or contracted to sell around 400,000 tons of rice, most of it 100% B grade, to Iran so far this year, out of the expected total volume of around 500,000 tons purchased or committed by Iran so far this year.

Iran bought only 101,504 tons of Thai rice in 2005, compared with 610,582 tons in 2004 and 490,180 tons in 2003, data from the Commerce Ministry of Thailand showed.

"I expect Iran will buy more than 500,000 rice from Thailand this year," Apichat said.

Thailand, the world's largest rice exporter, exported 7.3 million tons of rice in 2005, down markedly from 10.14 million tons in 2004, when Thailand had sizable stocks from the previous year.

Prices To Remain High On Govt Support

Apichat said he expects Thai rice prices to remain high through the rest of this year, thanks to limited availability in other exporting countries such as India and China.

The Thai government's price intervention program will also keep prices high, he said.

"India won't export (much) this year as it is building its national stocks. China doesn't export much also, and may import for domestic consumption," Apichat said.

Vietnam, the world's second-largest rice exporter has agreed to limit its exports at 5 million tons this year, down from 5.2 million tons last year, he said.

Meanwhile, the government's market intervention programs are helping keep prices steady.

In an attempt to boost paddy prices for farmers, the government buys at set prices and stockpiles the grain. The government is yet to sell the stocks it accumulated through the last intervention program, Apichat said.

"The government's stockpiling helps to boost prices as rice mills and exporters have to match the government's prices or make higher offers to farmers to get rice," Apichat said.

The last intervention program to shore up 2005-06 main crop prices concluded at the end of February. Under that program, the government added around 5.2 million tons of paddy to its stocks.

A separate program for the South, which wasn't included in the original program, started Feb. 1 and will end May 31. Southern Thailand produces very little rice.

"I don't expect the government to sell rice from its stocks soon. So prices will remain strong as availability is rather limited," Apichat said.

"Thai rice prices for 100% B grade, for example, shouldn't be lower than $300/ton (FOB Bangkok) for the entire year," Apichat said.
MGR Archive 4.4.2006
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