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Bangkok: Thai rice prices fell around 10 per cent yesterday as importers taking their cue from Manila's decision to scrap a large tender held back on purchases, offering respite to nations desperate for the staple.
Spiralling food costs - dubbed by the World Food Programme as a "silent tsunami" - have ignited fury and a rash of protests from Haiti to Somalia to Bangladesh after exporters curbed supplies to tame domestic inflation.
"Prices have peaked and forced buyers to hold back on orders. Now is the time for a correction," a trader with an international trading house said.
Five Thai exporters quoted prices for 100 per cent B trade white rice, the world's benchmark, at between $900 and $920 a tonne, free on board. That's down from last week's $990-$998 a tonne.
The price of five per cent broken grade white rice, which is usually purchased by the Philippines, also dropped to around $870-$890 a tonne from last week's $950.
Calming nerves further, Thailand, the world's big-gest rice exporter, backed off its unpopular rice cartel proposal and offered to host a forum of top producing nations to boost supplies and yields.
"If Thailand was going to set up a rice cartel to fix the price, that would worsen food security," Foreign Minister Noppadon Pattama told reporters after a lunch with diplomats from six rice-producing countries.
On Monday, the Philippines, the world's top rice importer, scrapped its largest rice tender of the year to buy 675,000 tonnes.
Manila's move to hold back importing until prices eased, sent a clear signal to global grain markets that the market might have peaked.
That view was echoed by the chairman of Ebro Puleva, one of the world's biggest rice sellers, who forecast that rice prices could fall to as low as $600 a tonne next year.
"I think the reasons are the Philippine tender and rising domestic supply as the second crop has come onto the market," said Sumeth Laomoraphorn, president of C.P. Intertrade.
About 4.2 million tonnes of milled rice would come to the market in May and June, when Thailand's second crop is harvested. But Thai rice prices are not expected to dive sharply over the next few weeks as buyers take advantage of price dips, exporters said.
Expectations
"I think buyers from the Middle East and some rich countries in Africa would start buying," said another Thai exporter. "They have money to afford rice, but they just waited for better prices."
Vietnam, the world's second-largest rice exporter, said it was considering imposing a duty on rice exports as it wants to save more of the grain for domestic consumption. But Prime Minister Nguyen Tan Dung reiterated a 2008 rice export quota of 3.5 million to 4 million tonnes.
Traders said the decline in prices could yet be limited if Myanmar, which has committed rice exports to neighbouring countries, decides to halt overseas sales and instead starts to import the grain after being hit by a devastating cyclone.
Some of Myanmar's rice customers are expected to turn to Thailand for supplies, after the military-ruled country was lashed by Cyclone Nagris. The storm killed at least 15,000 people and ripped through Myanmar's Irrawaddy delta, its main rice growing that was once dubbed the "rice bowl of Asia".
"Bangladesh and Sri Lanka would buy rice from Thailand if Myanmar fails to deliver the rice, but no deal has been made yet," an exporter said.
Although no figure for damaged crops has been reported, Minister Counsellor (Commercial) Mat-ayawongse Amatyakul said Myanmar's rice production was expected to drop because its rice growing areas were badly hit by the cyclone.
"Everybody said the damage was huge, but there's no confirmation from the Myanmar government on how much of rice supply will be cut this year."
Myanmar, the world's biggest rice exporter before Second World War, was expected to produce around 32 million tonnes of paddy in 2008, according to Myanmar's military junta. But traders, estimating output at around 20 million tonnes this year, said the government figure could have been exaggerated.
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