Unlike previous auctions, the process will be more transparent as the ministry is allowing all types of trader - exporters, domestic traders, rice packers, feed-meal producers, and millers - to take part in the bidding for a small lot of rice from 40 state warehouses.
The ministry will open the bidding letters, bargain over prices and select the winner within one day, during which all players can observe the transparency of the process, Duangporn Rodphaya, director-general of the Foreign Trade Department, said yesterday.
Bidders will be required to offer their prices between 8.30am and 11am, after which their letters will be opened at 1pm. The ministry's bidding committee will then select the winning bid or negotiate for the best price, all within the same day.
The result of the auction will then be submitted to the Rice Policy Committee for approval within a week, she added.
"The ministry has a working committee to work on the bidding process under a transparent method. They will set up a 'floor price' for the bidding. If bidders offer prices in accordance with the floor price, or not too low, the ministry will decide to sell the rice," said Duangporn.
Many rice traders are expected to show interest in joining the bidding due to the currently high demand in the market, she said, adding that the auction should not however negatively affect the market price because it is being held outside of the harvest season. About 30 rice traders participated in the department's clarification session concerning tomorrow's auction. They include CP Intertrade, Siam Indica, Capital Rice, Sandee Rice, and Olam (Thailand).
Rice purchased at the auction can either be sold domestically or in the export market.
Duangporn said the ministry would also hold other auctions and sell rice through other methods, such as allowing traders to offer to purchase rice directly from the ministry, selling through the Agricultural Futures Exchange of Thailand, and government-to-government contracts.
She said the sale of stockpiled rice from government warehouses should result in an increase in rice available on the market during the current global shortage.
Vietnam has had low rice production this year, while India has slowed down its rice export plan during the out-of-harvest season and because of lower stockpiles.
The Kingdom should be able to export 9 million-10 million tonnes of rice this year, said the senior official.
Meanwhile, the Commerce Ministry continues to sell rice to China under a memorandum-of-understanding contract to sell one million tonnes to the country each year.
Thailand has already shipped 100,000 tonnes of rice under this contract, and will soon negotiate to sell other 100,000 tonnes from the stockpiles, as well as a further 100,000 tonnes from the next crop due to be harvested starting in November.
Moreover, the department has also negotiated the sale of rice to other countries such as Malaysia, Indonesia and the Philippines. It projects releasing about 500,000 tonnes of rice per month from government stocks, starting this month.
Burin Thanatavornlap, managing director of Sandee Rice, said now was a perfect time for the authorities to sell rice from the stockpiles because of high demand in the market.
Rice prices should also be in accordance with market prices, which have increased during the past few months following the end of the last harvest season, he said.
The price of new-crop white rice is currently quoted at Bt12.50 (S$0.49) per kilogram, while jasmine rice is quoted at Bt31 and husk rice at Bt9 per kilo, he added.