Iran may start buying Thai rice in June

Enlarge Photo A worker carries a bag of milled rice at a mill in Suphan Buri province,...

Thu, May 8 11:53 AM

By Apornrath Phoonphongphiphat

BANGKOK (Reuters) - Iran, one of Thailand's major rice buyers, is likely to start buying Thai rice in June when prices are expected to drop, a senior Thai commercial diplomat said on Thursday.

"Iranian officials told me that they would start buying Thai rice in June, when the country's second crop has been completely harvested and prices should ease, Thai Minister Counselor (Commercial) to Tehran Wanchai Varavithya told Reuters in a telephone interview.

Iran imports around 1 million tonnes of rice each year, of which around 600,000 tonnes usually come from Thailand, but the country has yet to buy any Thai rice this year because of high prices, he said.

"There is constant rice demand in Iran. It should buy Thai rice not less than what it used to buy, but it is waiting for an appropriate time and price," he said.

Thai rice prices have surged to an historic high this year, with benchmark 100 percent B grade white rice jumping above $1,000 a tonne in April, from the $383 a tonne quoted in January.

Prices of the benchmark grade fell to $920 a tonne on Thursday. Traders expect easing prices to lure buyers back to the market and resume buying.

Asian rice prices have almost trebled this year and prices on the Chicago Board of Trade have risen more than 80 percent to hit successive record highs as export curbs by leading suppliers such as India and Vietnam fanned fears about food supplies. The restrictions come at a time when global rice stocks have halved since hitting a record high in 2001.

In May, prices eased due to waning demand as the sky-high levels forced buyers to hold back their orders just as supply in Thailand, the world's biggest rice exporter, was increasing.

And Thai rice is expected to slip further in June when the country's second smaller crop is harvested, he said.

Thailand is forecast to produce 4.2 million tonnes from the second smaller crop. It is also expected to produce an extra 1 million tonnes rice from a rare third crop, grown mostly in well-irrigated areas in the central part of the country.

PATH CLEARED

Iran slashed its rice import tariff to 4 percent in April, down from 150 percent, allowing private importers to buy rice freely for the first time in a decade, Wanchai said.

"Iran always buys rice through the government channels only. Now, it is clear that Iran is opening another channel to buy rice which reflects strong demand," he said.

But Wanchai said the government importing channel still existed as Iranian officials were due to visit Southeast Asian countries, such as Thailand and Vietnam, to buy rice later this year, even though no dates had yet been scheduled.

The price of some local rice varieties in Iran has more than doubled over the past 10 days, a daily reported on Wednesday.

Rice is the food staple for Iran's 70 million people, and higher prices could cause problems for ordinary people, already reeling from steadily climbing inflation of more than 20 percent annually.

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