Rice markets freeze

Rice trading grinds to a halt in anticipation of new rice policy likely to drive rices higher in Thailand as well as world.

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AGRICULTURE, Rice traders await clarity on PT policy by Phusadee Arunmas

The rice market is frozen as traders worry that the revival of the rice mortgage policy by the new Pheu Thai-led government could jack up prices of white rice in the global market to as much as US$850 a tonne.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said millers had stopped buying paddy and were adopting a "wait and see" stance as they monitor price trends.

At the same time, exporters have stopped taking orders from international buyers, especially for shipments to be delivered in August and September, as they are afraid of losing money.

"All parties are waiting to see the details of implementation guideline of the rice mortgage policy under the new government. So Thai rice exports will certainly be reduced over the next two to three months," he said.

The Pheu Thai policy to reinstate mortgaging by purchasing paddy into government stocks at 15,000 baht a tonne ($488) would increase the FOB price of white rice by $330 a tonne.

The current price of 5% white rice is $520 a tonne so the new price will be $850 immediately. This jump in price, instead of a gradual rise, would be difficult for buyers to accept," said Mr Chookiat.

A survey by Bloomberg News indicated that rice prices in Thailand may rally 56% by year-end to $810 a tonne.

"It isn't only Thai prices that will go up, the rest of the world will have to follow," the agency quoted Mamadou Ciss, CEO of Geneva-based Hermes Investments Pte, as saying.

"The price may jump $100 a tonne within two months and peak at $700," said Mr Ciss, who correctly predicted in 2006 that prices would double.

Export prices will probably rise 10% in a month, said Wichai Srinawakul, vice-president of the Thai Rice Mills Association. When the price-pledging scheme is implemented, it will lift the price further, probably to $830 per tonne by the end of this year.

With higher rice prices foreseen, Mr Chookiat is concerned that buyers might turn to other countries, especially arch-rival Vietnam, or they might be more self-sufficient countries.

He urged the new government to make sure it does not repeat the mistakes made under earlier rice mortgage programmes, which were widely criticised as corrupt. For example, farmers had to pay certain sums to participate in the scheme while politicians sought benefits from rice millers and exporters.

As well, governments ran up large losses for storing rice for months or even years in the hope that export prices would rise. In the end, most of the rice was sold for less than the government had paid originally.

Mr Chookiat also said the government needed to ensure that cheaper paddy from neighbouring countries is not smuggled into Thailand to take advantage of high pledging prices.

"The private sector still sees no solutions to the problems because these are endless issues," he noted.

Thailand exports approximately one million tonnes of rice a month. But the projection for July is 700,000 to 800,000 tonnes as exporters still have orders in hand.

The projection has been reduced to 500,000 tonnes in the next two months. Overall exports for this year may be around 10 million tonnes, instead of 11 million.

The Democrat-led government replaced the mortgage scheme with an insurance programme under which farmers were compensated directly if their selling prices were below agreed benchmarks set every two weeks.

The most recent benchmark price for 5% white rice was about 11,000 baht a tonne

(Source: Bangkok Post, AGRICULTURE, Rice traders await clarity on PT policy, 5/07/2011, Phusadee Arunmas, link) 

X in anticipation of Y -  X happened or was done because Y is expected
grind to a halt - stop quickly

traders - people who buy and sell things for a profit (rice and agricultural commodities or securities: stocks, bonds, derivatives) ผู้ค้าหุ้นและหลักทรัพย์
clear (adjective) - something easy to see or an idea easy to understand
clarity (noun) - the state or condition of being clear (example: there is great clarity in his ideas)
policy - a plan of action to guide decisions and achieve outcomes, a set of plans or action agreed on by a government, political party, business, or other group นโยบาย (See Wikipedia)
frozen - when something stops moving (when water turns to ice, for example)
rice market is frozen - market has stopped, people are not buying and selling goods (because of uncertainty about policy)

revival - bring back to life, to bring back into use something that has not been used for a period of time
mortgage - a legal agreement in which you borrow money from a bank การจำนอง
rice mortgage policy - the old style rice policy
global - throughout the world ทั่วโลก

rice mill - a factory that processes rice from the field and creates packaged rice in bags that can be sold in stores
millers owner - owner-operators of rice mills
paddy - rice after it has been harvested from the field ข้าวเปลือก

adopting - accepting or starting to use something new นำมาใช้
stance - your attitude, views or opinion about an issue ความเห็น จุดยืน
adopting a "wait and see" stance - not making any decisions until you see what happens

monitor - to regularly check something or watch someone in order to find out what is happening ตรวจสอบ ตรวจตรา เฝ้าจับตาดู เฝ้าดู จับตาดู จับตา เฝ้าระวัง  
price trends - the general direction that prices are heading over time

international - ระหว่างประเทศ between countries
international buyers - buyers from other countries (export rice from Thailand, import the rice into their country)
parties - all people or organizations entering into some agreement or who are affected by some decision

implementation - making a plan into reality, actually do or carry out a plan, execution of a plan (See glossary) นำมาใช้
guideline - rules that tell you (roughly) how to do something

reinstate - to cause something to exist again นำกลับมาใช้อีก
stocks - large amounts stored for future use

current - a strong movement of water in one direction, in this case, meaning a very difficult or dangerous situation กระแส
current - of the present time ปัจจุบัน
immediately - happening right after something else with no delay; right away ทันที
gradual - moving slowly
survey - gathering information about what people think about different subjects (public opionion) by asking large numbers of people questions and counting their answers, and then using statistics, graphs, and tables to present results (See Wikipedia) การสำรวจความเห็น
rice prices rally - rice prices increase (over a period of time)

peak - the time when something is at its highest or greatest level ช่วงเวลาที่พบมากที่สุด
double - to become twice as big, twice as much or twice as many เพิ่มเป็นสองเท่า
scheme - a plan that is developed by a government or large organisation in order to provide a particular service for people แผนการ โครงการ
implemented - when a plan is put into action, actually doing the things in a plan
lift price - increase price

foreseen - see as happening in the future
concerned - worried about something มีความกังวล
rival - a person you are competing against or opposing คู่แข่ง
arch-rival - the most rival (or competitor) that you have
sufficient - enough พอเพียง
self-sufficient - when you can take care of all your own needs (without relying on others)

urge - advise someone very strongly about what action should be taken วิงวอน
criticise - find error or fault with something
participate - to take part in or become involved in an activity มีส่วน
benefits - goods things that a person can get from some activity ผลประโยชน์
ensure - to make certain that something happens or is done รับรอง ให้ความมั่นใจ ให้การยืนยัน
smuggled - bring goods into a country secretly and illegally
advantage - a condition giving a greater chance of success ความได้เปรียบ
take advantage of - act to get some benefit from a situation (example: take advantage of the low prices for oil during the sale and buy several boxes of oil)
pledging prices - the prices offered by the government to farmers under the "rice mortgage policy" that will be revived

sector - a part of the economy (public sector = government, private sector = all businesses, household sector = families and consumers, banking sector,...) ภาคเศรษฐกิจของประเทศ (See Wikipedia)
private sector - all the businesses in the economy
issues - problems that need to be considered, decided on, decisions made about ประเด็น
projection - guessing a future amount, a calculation or guess about the future based on information that you have การคาดคะเน

insurance - a system that pays money to help people harmed by bad event, a system of protection against loss (usually a person pays money every month (premiums) for a guarantee that the company will pay them money if they or their property is damaged or lost (See Wikipedia) การประกันภัย

compensated directly - given money directly (not through another person or "middleman")
benchmark - a standard that other things can be compared to and measured by
benchmark price - the one price that other prices are calculated from (so only need to look at this price to see if all prices are currently moving up or down)