July 25, 2019 / 1:19 PM / in 25 days

Asia Rice: Thai drought raises supply fears, Bangladesh reels under floods

BENGALURU (Reuters) - Drought conditions in Thailand stoked concerns of a drop in supply even as a strong baht kept export prices for the Thai variety higher than Asian competitors this week, while floods wreaked havoc on crops in Bangladesh.

A worker cultivates rice plants at Sompot Tubcharoen's farm in Bangkok, Thailand August 28, 2018. REUTERS/Soe Zeya Tun/Files

While prices for Thailand’s 5% broken rice RI-THBKN5-P1 eased to $390-$395 a tonne free-on-board Bangkok on Thursday from last week’s $401-$402, they were still more expensive than rates in other hubs.

Demand for Thai rice remained flat, traders said.

Meanwhile, a drought in more than a dozen provinces has stoked worries over supply, with the Meteorological Department reporting rainfall in the main rice-growing regions was the lowest in 10 years.

“The drought situation is raising market concern over supply,” a Bangkok-based trader said, adding: “but there is not yet a shortage in actual supply so far.”

The Thai government asked farmers in drought-hit areas to delay rice planting as pumping of water from reservoirs for irrigation threatens household supplies. [nL4N24N1KS]

Thailand’s rice exporters lowered their target for annual exports to 9 million tonnes from 9.5 million, after a sharp fall in the first half. [nL4N24P10C]

In Bangladesh, floods have submerged more than 50,000 hectares of paddy fields, as per a preliminary assessment by the agriculture ministry.

“We will get a clear picture of the extent of the damage once the water recedes,” a senior official said.

This could be a major blow to the country at a time when farmers are unable to secure fair prices for produce, with no fresh overseas deals in sight.

In top exporter India, 5% broken parboiled variety RI-INBKN5-P1 rose to $381-$384 per tonne from last week’s $374-$377 as paddy prices jumped even though demand from buyers in Asia and Africa was muted.

Exports of white rice have almost stopped, while shipments of the parboiled variety have dropped sharply due to higher paddy prices, said an exporter based in Kakinada in the southern state of Andhra Pradesh.

Meanwhile, below average monsoon rains have raised concerns over output of summer-sown crops. [nL4N24P3CA]

In Vietnam, 5% broken rice rates RI-VNBKN5-P1 were unchanged at $350 per tonne. 

“Demand for Vietnamese rice remains moderate with most of the new orders coming from Philippines and Malaysia,” a trader in Ho Chi Minh City said. 

Traders said shipments from Vietnam in July could fall significantly. Preliminary data showed 194,400 tonnes will be loaded at Ho Chi Minh City ports in July, versus 311,700 tonnes in June. 

“While prices of the regular 5% broken rice stayed flat, prices of jasmine rice have climbed to $500-$505 per tonne from $490 last week due to tight supplies,” another trader said. 

Reporting by Ruma Paul in Dhaka, Khanh Vu in Hanoi, Rajendra Jadhav in Mumbai, Panu Wongcha-um in Bangkok; editing by David Evans

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