Thai floods not affecting rice prices in Singapore for now

Seet Sock Hwee Channel NewsAsia 26 Oct 10;

SINGAPORE : Rice prices in Singapore remain stable despite severe floods in Thailand, which have swamped thousands of acres of farmland.

The Thai Agriculture Ministry has estimated that at least 300,000 tonnes of paddy could be affected.

The Singapore General Rice Importers Association said Singapore's strong currency has helped to mitigate any price hike.

A check with major supermarkets also showed that prices here remain unchanged despite global rice prices going up by at least 5 per cent.

One supermarket attributed it to Singapore's diversified sources of imports.

Besides Thailand, which is the world's biggest rice exporter, Singapore also imports rice from Vietnam and Cambodia.

Tng Ah Yiam, managing director of Group Purchasing, Merchandising and International Trading at FairPrice, said: "We have noticed recent fluctuations in rice prices and are monitoring the situation closely.

"As of now, FairPrice wishes to assure customers that the prices of our range of housebrand rice have remained unchanged for the past 12 months. This is due to our policy of diversified sourcing and forward buying. FairPrice also strives to be the last to increase prices and the first to drop prices".

Wholesalers are also monitoring the situation.

Andrew Tan, chairman, Singapore General Rice Importers Association, said: "The concern should be in two weeks time. Hopefully the water would subside and thereby not affect the harvest that much."

- CNA/al

Rice Likely to Extend Rally as Flooding Decimates Asian Crops
Supunnabul Suwannakij and Luzi Ann Javier Bloomberg BusinessWeek 26 Oct 10;

Oct. 27 (Bloomberg) -- Rice prices are likely to extend a rally as supplies are squeezed after crops across Asia, from the world’s largest buyer to the two biggest exporters, were devastated by storms and flooding.

“Rice production will become an issue next year,” Prasert Gosalvitra, head of Thailand’s state-run Rice Department, said in a phone interview from Bangkok. “Supply will become tight, driving prices higher.”

“Prices can very well go up from today by $100 or even higher around the end of the year or in January,” Mamadou Ciss, chief executive officer of Singapore-based Hermes Investments Pte. and a rice broker since 1984, said by phone from Geneva. Thai rice prices, the benchmark for Asia, were at $510 a ton on Oct. 20, close to a six-month high, according to data from the Thai Rice Exporters Association.

Rough-rice futures on the Chicago Board of Trade will probably advance to $16 per 100 pounds, Ciss said. Rough-rice for January delivery climbed to $15.21 yesterday, the highest level since Dec. 28, 2009. The contract gained for a 12th day today, the longest winning streak since at least 1991, and traded at $15.125 at 8:43 a.m. Singapore time.

The staple food for half the world has jumped 58 percent from this year’s low of $9.55 per 100 pounds on June 30 as weather damage to crops in Pakistan and Thailand, which represent a combined 43 percent of global exports, threatened global supplies. Rice was $77.47-a-ton more expensive than wheat today, after slumping to a discount of about $53 in August.

Thai Output

Rough-rice production from the main crop in Thailand, the world’s biggest exporter, will “definitely” decline and is estimated to fall by at least 1.5 million tons after the worst floods in five decades inundated key growing areas, according to Prasert Gosalvitra, head of the state-run Rice Department. That would be a 6.5 percent decline from last year’s main crop of 23 million tons. Actual losses won’t be known until floodwaters recede, he said.

“It’s not only us,” Prasert said in a phone interview. “Vietnam, China, Myanmar and Pakistan will see output falling from flood damage.” Thailand produces two rice crops a year, with the main crop harvested from late October to April representing about 75 percent of the country’s output.

Floods spread across 34 provinces in central, north and northeastern Thailand, leaving at least 40 people dead and damaging 3.2 million rai (1.3 million acres) of agricultural land, according to the Department of Disaster Prevention and Mitigation. Flooding could cause as much as 24 billion baht worth of damage and may slash the nation’s economic growth in the fourth quarter by 1 percentage point, according to Kasikornbank Pcl.

Halted Sales

The Thai government halted sales of rice from state stockpiles and asked the agencies involved to review plans, deputy government spokesman Marut Masayawanit said yesterday after a weekly cabinet meeting.

Thailand initially planned to reduce state stockpiles to 1 million tons after sales earlier this year reduced inventories to around 2 million tons, Taradon Pianphongsant, deputy secretary-general to the Prime Minister Abhisit Vejjajiva, said by phone. Revisions will be made based on the level of crop losses, he said.

“The suspension of government rice sales may raise supply concerns and strengthen prices,” said Kiattisak Kanlayasirivat, a director at Novel Commodities SA’s Thai office, which trades about $600 million of rice a year. The Thai benchmark rice price may rise to $550 a ton in November or December, when the Philippines, the world’s largest buyer, returns to the market to meet a shortfall widened by damage to crops from Typhoon Megi, he said.

Typhoon Damage

“The Philippines may import more than 2.5 million tons next year,” Prasert said.

The Philippines lost 314,577 tons of rough rice and 25,812 tons of corn after Typhoon Megi struck some of the nation’s biggest producing areas, the Department of Agriculture said in a statement on Oct. 21. A total 285,477 hectares of rice land and 15,474 hectares of land planted with corn were affected by the storm, it said.

Pakistan’s deadliest floods last month ruined crops worth 281.6 billion rupees ($3.27 billion), destroying 2.39 million tons of rice, Farm Minister Nazar Muhammad Gondal said Sept. 28. Pakistan was the world’s third-biggest exporter last year.

Rice production in the U.S., the fourth-biggest exporter, may be at least 10 percent smaller than estimated, missing a forecast for record output and pushing prices to as high as $17 per 100 pounds, Dwight A. Roberts, president of the U.S. Rice Producers Association, said Oct. 12.

A La Nina weather event this year has brought heavier-than- usual rainfall to parts of Australia and Asia, including Thailand. The weather event will intensify around the end of the year, Thailand’s Meteorological Department has said.

--Editors: Matthew Oakley, Jarrett Banks.