Thai Govt Offers 33,098 MT Of 5% White Rice On AFET

The Thai Commerce Ministry has offered 33,098 metric tons of 5% white rice from the 2005-06 harvest for the first time through the Agricultural Futures Exchange of Thailand, secretary-general of the Office of
the Agriculture Futures Trading Commission, Chaipat Sahasakul, said Monday.
 
  A total of 25 exporters and millers participated in bids late Friday. The move is in line with the Commerce Ministry's proposal to use the AFET as a channel to unload the government's rice stockpiles to boost trading on the two-year-old futures market. 
 
According to Deputy Commerce Minister Oranuj Osathananda, the new auction method would help set a direction for rice prices in the market as well as increase the transparency of rice trading. Chaipat said the bidding was on a basis-price method, linked to the price of the 5% white rice contract quoted on the AFET.
 
  Previously, the AFET's rice auctions were conducted for a big lot of rice with few bidders participating. The highest price wins. As of now, the big lots are split into several small lots. The winners of each lot will be those offering the best basis, which is the highest addition or smallest discount to the prevailing futures price.
 
  The basis can be calculated by considering two factors - the quality of rice in the stock of the Commerce Ministry's Public Warehouse Organization, and the method of delivery of the rice lot.
 
  C.P. Intertrade, one of the country's leading rice traders and exporters, won the biggest lot of 10,755 tons by quoting the smallest discount of THB0.35-THB0.55 per kilogram. The rice is to be delivered by June 1.
 
  Most bidders offered the market price minus THB1.00 per kilogram. "The ministry was quite satisfied with the prices offered, although it was a little bit lower than the current market price," Chaipat said.
 
  He said more bidders would join auctions and the bidding price will not be flat, as it would vary according to the price of the referred AFET contract. Also, the method would help decrease the government's burden from
guaranteeing the rice price for farmers.
 
  "Over the past two years, the government spent some THB18 billion ($517 million) to help farmers with the price guarantee. This method will also develop the market and boost liquidity in the exchange," Chaipat said.
 
  The ministry intends to sell a total of 150,000 tons of 5% white rice available from the 2005-06 crop season for bidding on AFET by dividing into three lots, which should be completed by August.
 
  It will conduct further bidding for white rice in order to serve market demand and clear out its inventory of 3.3 million tons of rice of all grades.