Thai government rice stocks jumped this week as the government continued to buy rice for stockpile, supporting prices even though overseas demand was weak and domestic costs for the grain staple high, exporters said on Wednesday.
The government's paddy stocks have risen around 8 percent since April to a record 12.6 million tonnes, according to Commerce Ministry data.
"That equates to around 7.56 million tonnes in terms of milled rice and the stocks are expected to grow much bigger as the scheme will run until end of June," said Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association.
Little rise rice is left in the market, pushing domestic milled rice prices to 18,000 baht ($580) per tonne, up from 17,000 baht last month, one miller said.
That pushed export prices for Thailand's benchmark 100 percent B grade w hite rice up to $610 per tonne on Wednesday, the highest since December 2011, from last week's $600.
Thailand, until now the world's biggest rice exporter, marked the start of its main 2012/13 rice crop on Wednesday with Crown Prince Maha Vajiralongkorn presiding over the ancient ritual of Royal Ploughing Day to encourage farmers across the country to produce a good crop.
But a good crop may not allow it to hold on to the top position.
It normally produces around 30-32 million tonnes of paddy each year, or around 18 million tonnes of milled rice, and around 8-10 million tonnes is normally available for exports.
It exported a record 10 million tonnes in 2011.
But the state intervention scheme has priced its grain out of the market and this year, for the first time in three decades, it could be dragged down to number two in the rankings behind Vietnam, or even third behind India.
The intervention has pushed Thai prices to $520-$610 per tonne, or around $100-$150 per tonne higher than rice from India and Vietnam, resulting in a sharp drop in exports.
Thailand has exported just 2.1 million tonnes so far this year, down 44 percent from the same period of last year.
VIETNAMESE PRICES EASE
In Vietnam, prices eased as loading demand subsided, traders said.
Its 5 percent broken rice eased to $440-$445 a tonne, free on board Saigon Port, from $445 last Wednesday.
The 25 percent broken grade softened to $395-$400 a tonne from $400.
"The Philippines is still taking rice but loading is slow as they take the grain in containers, similar to the cargoes for China," a trader in Ho Chi Minh City said.
In recent weeks loading to China has slowed because of a shortage of containers, which makes it easier to transport rice inland for distribution.
Another trader said showers, signs of the rainy season returning to the southern region, have slowed loading at Saigon Port in the past week.
The rainy season is due to return fully in the second half of May.
"Prices are kept stable as fresh grain supply has stopped after the harvest ended," another trader said.