Thai floods damage rice, threaten exports

SINGAPORE/HANOI Wed Oct 12, 2011 9:58pm IST

A traffic policeman gestures to a car as he directs traffic along a flooded street in Nonthaburi province on the outskirts of Bangkok October 12, 2011. REUTERS/Chaiwat Subprasom

A traffic policeman gestures to a car as he directs traffic along a flooded street in Nonthaburi province on the outskirts of Bangkok October 12, 2011.

Credit: Reuters/Chaiwat Subprasom

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SINGAPORE/HANOI (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.

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)

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