Thai floods damage rice, threaten exports

Naveen Thukral and Ho Binh Minh
Reuters 13 Oct 11;

(Reuters) - Thailand's worst floods in half a century have inundated farms and mills, squeezing rice supplies from the world's top exporter, while rival Vietnam is expected to default on half a million tonnes as prices of the staple climb.

Flood-damage to Thai rice comes as the nation's new government implemented a scheme that gives farmers a big increase in farmgate prices, raising concerns over food inflation among buyers in Asia, the Middle East and Africa.

Swollen rivers were hampering the movement of barges, while ships at the ports were unable to load cargoes in the face of heavy rains, traders said on Wednesday, adding that at least 300,000 tonnes of rice exports would get delayed, forcing buyers to seek alternatives such as from India and Pakistan.

"The situation is really bad as it is raining non-stop, a lot of mills have been affected and a lot paddy which was lying around in the open or under tarpaulin has got submerged," said a trading manager with an international rice exporter in Bangkok.

"We see it as a serious problem."

The floods have already prompted the government to reduce its estimate of the main rice crop to 21 million tonnes from 25 million for which the harvesting was due to start this month.

"Even loading for vessels which are waiting for cargo will get delayed," said another trader from Bangkok. "It is raining heavily, so loadings have fallen and it is difficult to get cargoes alongside the vessel."

Thailand's prime minister warned businesses not to take advantage of flooding around the country to push up prices as residents of Bangkok cleared supermarket shelves, worried that the capital could be swamped in coming days.

At least 281 people have been killed by heavy monsoon rain, floods and mudslides since late July and 26 of Thailand's 77 provinces are inundated, said the Department of Disaster Prevention and Mitigation.

The north, northeast and central plains have been badly affected and Bangkok, which is only two metres (6.5 ft) above sea level, is in danger as water overflows from reservoirs in the north, swelling the Chao Phraya river.

But the floods have limited impact on sugar output, Thailand's other major export, with about 200,000 rai of cane plantation hit, said the Office of the Cane and Sugar Board, accounting for 2-3 percent of the 8.7 million rai (1.4 hectares) of plantation estimate for 2011/12 production.

For PDF on surging grain prices fuelling Asian inflation: click link.reuters.com/jez62s

For graphic on top importers and exporters: click link.reuters.com/muq53s

The export price of Thai benchmark 100 percent B grade white rice rose to $670-$680 a tonne last week from $650, while Vietnamese rice climbed to its highest in more than three years on thin stocks and expectations of higher demand.

On Wednesday Vietnam's 5 percent broken rice stood at $575-$590 a tonne, FOB, against $575-$580 a week ago. It touched $580-$590 on Monday.

VIETNAMESE DEFAULTS, INDIAN EXPORTS

Vietnam, the world's second-largest rice exporter, could default on deliveries of 520,000 tonnes of the grain this year as exporters failed to buy on domestic markets for loading due to a price surge, a state-run newspaper reported.

The projected defaults would account for 7 percent of Vietnam's annual export volume forecast at 7.5 million tonnes this year, breaking the record of 6.83 million tonnes in 2010.

The market is expecting higher rice demand in 2012 from the Philippines, where the volume of unmilled rice damaged by two recent typhoons has climbed to about 1 million tonnes, a senior agriculture official said.

"The price is rising to intercept the Philippines' demand," a Vietnamese trader in Ho Chi Minh City said. "The Philippines will buy for next year, following the impact of storms and floods and a decline in stocks."

President Benigno Aquino said the Philippines did not need to import more rice for this year's supply despite crop losses from typhoons because it had ample stocks. However, officials have said it was reviewing import plans for 2012.

Before the strong typhoons hit major rice-growing provinces in northern Philippines, the government had said it could limit rice imports for 2012 to not more than 500,000 tonnes on anticipation of a record paddy output of 17.3 million tonnes.

The Southeast Asian country bought 860,000 tonnes of rice this year, after importing 2.45 million tonnes for 2010, making it the world's biggest rice buyer.

India, which eased curbs on rice exports in September, is likely to make the most of the situation in Southeast Asia with plentiful stocks.

"We estimate about 1.0-1.5 million tonnes of Indian rice have been contracted for exports after the government freed overseas sale," said Vijay Setia, president of the All India Rice Exporters Association.

Traders said about 700,000 tonnes would be shipped by December from ports on India's east coast to destinations such as Bangladesh, Nigeria and South Africa. The export deals are happening in the range of $420-$480 a tonne, free on board (FOB) basis, for common rice.

On Sept. 1, India's rice stocks at government warehouses stood at 22.7 million tonnes against a target of 9.8 million tonnes.

India's summer rice production is expected to be 87.1 million tonnes in the crop year 2011/12, compared to 80.65 million tonnes a year ago, according to the farm ministry's first of the four forecasts released on Sept. 13.

(Additional reporting by Jutarat Skulpichetrat in BANGKOK, Ratnajyoti Dutta in NEW DELHI and Erik Dela Cruz in MANILA; Editing by Ramthan Hussain)

Indochina floods may force Malaysia to seek rice from elsewhere
Sira Habibu The Star 14 Oct 11;

PETALING JAYA: As flood waters rise to threaten parts of Indochina, there is growing concern over public safety and food supply, including rice.

Some 1.5 million hectares of the region's famous padi fields including Thailand, Vietnam, Cambodia and Laos with their rich, low-laying lands along the rivers have already been affected.

This has prompted Malaysia, which depends on these countries for 30% of its rice supply, to look towards other nations for the precious commodity.

With one-third of the country's overseas rice supply coming from Thailand, Malaysia has already received half of its consignment but the other half is still in Bangkok that even now is seeing rising water levels.

Deputy Agriculture and Agro-based Industry Minister Datuk Johari Baharum said the country would look into sourcing rice from Pakistan, India or other countries.

“We have a stockpile of close to a million metric tonnes of rice lasting more than five months. Our padi fields, from which we are getting 70% of our supply, are not affected,” he said, adding that Malaysia's move towards self-sustainable rice production would eventually reduce dependence on imports.

Malaysians consume 180,000 tonnes of rice each month.

UN disaster reduction chief Margareta Wahlstrom said the entire region would suffer from rising cost of food prices as potential harvests had now been devastated.

“The damage is very serious this year and it will be some time before people can resume normal lives,” she said in a statement.

As the Thai capital braces for the worst floods in decades, Prime Minister Yingluck Shinawatra had warned that many provinces could remain submerged for the next two months, including the country's rice fields.

Workers hurriedly dredged canals and cut new waterways yesterday in an attempt to protect the city.

At least 283 people have been killed in Thailand since late July by floods and mudslides that have devastated rice crops and shut dozens of factories.

American computer hard drive manufacturer Western Digital Corp and Japan's Toyota Motor Corp became the latest to suspend production in Thailand yesterday.

The Malaysian Meteorological Department confirmed that the Haitang tropical storm and the Nesat and Nalgae typhoons had caused downpours and strong winds in Vietnam, Cambodia and Thailand.

“Continuous rain has aggravated the situation and the floods are said to be the worst in 50 years.

“Furthermore, the May to September period is the rainy season in the northern and western coasts of Thailand, brought about by the southwest monsoon,” it said in a statement.

However, the department said there was no indication that the northern part of Malaysia, where the country's rice bowl is located in Kedah, would be affected by the storms.

Bangkok Strengthens Defenses As Floods Close In
Panarat Thepgumpanat PlanetArk 14 Oct 11;

Workers and soldiers raced to finish defensive walls around inner Bangkok on Thursday as floodwater that has covered about a third of Thailand threatened the capital.

At least 283 people have been killed around the country by heavy monsoon rain, floods and mudslides since late July and in the past week industrial zones north of Bangkok have been inundated, adding to the damage to the economy.

After a meeting with ministers, army chief Prayuth Chan-ocha told reporters that flood barriers in three vulnerable locations in Bangkok had almost been completed.

"We talked about evacuation plans to help people living near the Chao Phraya river. If there's an emergency, we're ready to act," he said.

"The worry now is that from today until October 19 there will be a high tide and the important thing is to push water out to the sea as fast as possible."

Bangkok accounts for about 41 percent of Thailand's economy and any serious disruption to life in the capital could cause growth forecasts to be slashed further.

Kittirat Na Ranong, deputy prime minister in charge of the economy, told reporters that the flood damage was estimated at more than 100 billion baht ($3.2 billion), over 1 percent of GDP, and could get worse.

Consumer confidence fell in September because of the floods and could plunge in October, according to economists at the University of the Thai Chamber of Commerce.

Last week, the university cut its forecast for GDP growth this year to 3.6 percent from 4.4 percent and then cut it again on Thursday to 3.0-3.5 percent.

The Finance Ministry has cut its growth forecast to 3.7 percent from 4.0 percent.

The province of Ayutthaya to the north of Bangkok has been badly hit and at least three big industrial estates there have closed temporarily. A Nikon Corp digital SLR factory and a Honda Motor Co Ltd assembly plant have closed.

The north, northeast and central plains of Thailand have been worst hit and Bangkok -- which is only two meters (6.5 ft) above sea level -- is in danger as water overflows from reservoirs in the north, swelling the Chao Phraya river.

Some outer areas of greater Bangkok have already flooded but authorities hope the center will be saved by existing defensive structures plus three new walls, which will help channel water to the east and west of the city into the sea.

"UNDER CONTROL"

Run-off water from the north will arrive in the Bangkok area at the weekend at the same time as high tides. This may also coincide with storms and heavy rain.

Sanya Cheenimit, director of Bangkok's drainage and sewerage department, reported flooding in three eastern districts of Bangkok that were mainly farm areas.

"I want to reassure you that the flood situation in Bangkok is still under control," he told Reuters. "All the 50 districts of Bangkok have readied evacuation plans ... But for now, there's still no sign that we need to move people out."

Prime Minister Yingluck Shinawatra was also optimistic.

"Bangkok we can say is safe, especially inner Bangkok, behind the embankments there won't be a problem. Outer Bangkok might have problems but the water won't be very high," she said after surveying the area by helicopter.

Despite the reassurances, residents have stocked up on bottled water and foodstuffs such as instant noodles.

More than 2 million people are estimated to have been affected by floods around the country and essential goods are in short supply in some areas because of disruption to road and rail traffic, with some main roads to the north cut off.

Hundreds of volunteers gathered on Thursday at the government's flood crisis center at Bangkok's old Don Muang airport, loading donated water, food and medicines on to trucks to be distributed to the worst-hit areas outside the capital.

In Bangkok, authorities are most concerned about 27 communities with 1,200 households along the river.

"We are worried about all the areas near the Chao Phraya river," army chief Prayuth said.

"We've asked people not to break the flood barriers because it may cause water to overflow into Bangkok," he added.

Some residents of flooded outer areas have vented their anger at the temporary walls put up to protect the capital.

The governor of the neighboring province of Pathum Thani called on Wednesday for a state of emergency to be declared to give the security forces power to stop such acts, but Yingluck ruled that was not necessary.

(Editing by Sugita Katyal and Yoko Nishikawa)