AGRICULTURE / COMMODITIES

State rice holdings offered in futures market

The government yesterday embarked on a plan to sell 33,000 tonnes of 5% white rice for the first time through the Agricultural Futures Trading Commission of Thailand (AFET), drawing 25 interested exporters and millers to participate in bids. Deputy Commerce Minister Oranuj Osathananda said the new auction method would help set a direction for rice prices in the marketplace as well as spur more interest in the two-year-old futures market.

She said bidding was on a basis-price method, linked to the price of the 5% white rice contract quoted on the AFET.

The basis can be calculated by considering several factors such as the quality of rice in the stocks of the Commerce Ministry's Public Warehouse Organisation (PWO), and transport and packaging costs.

Winners would be those offering the best basis price, which represents the highest addition or the smallest discount to the prevailing futures price.

Prices in yesterday's bidding varied, with C.P. Intertrade offering the best basis price at about -35 to -55 satang per kilogramme. Most bidders offered -1.00 baht per kg. The winners will be announced on Tuesday with the rice to be delivered by June 1.

According to Ms Oranuj, the government plans to sell a total of 150,000 tonnes of 5% white rice available from the 2005-06 crop season through the AFET by dividing into three lots.

Rut Subniran, the managing director of Patum Rice Mill and Granary Plc, said that selling rice through the AFET was taken a good step and could help lessen the government's burden from guaranteeing rice prices for farmers.

The company yesterday bid for 1,800 tonnes, proposing a basis price at -1.20 baht per kilogramme.

Bangkok Post

Last Updated : Saturday April 21, 2007