Thailand has postponed indefinitely a tender to sell up to half-a-million tonnes of rice from bulging stockpiles as it tries to avoid low prices against the backdrop of rising world supplies, a senior Commerce Ministry official said on Monday.
The delay is another sign of trouble looming for Thailand's two-year old policy to pay farmers more for their grain than its value on global markets, which has strained government finances and cost the nation its spot as the world's top rice exporter.
Traders and industry officials estimate the government holds a record 17 million tonnes of milled rice bought at 15,000 baht (S$648) per tonne, or about 50 per cent above the market rate, in the populist programme to support its farmers.
While officials publicly deny the scheme is in crisis, the government is looking at measures to stem ballooning losses so far estimated at US$6 billion.
Last month, the government said it would hold a tender to sell up to 500,000 tonnes of rice from stocks by mid-April to clear warehouse space for purchases in the second crop, when it is expected to buy around 7 million tonnes of paddy.
"We think that the timing was not very good," said Pranee Siriphan, head of the ministry's Foreign Trade Department. "We need to discuss again in the National Rice Committee later this month when is the right timing."
A major reason for the rethink was rising supply in major producing countries that has already pulled down global rice prices and could prompt low bids from buyers, Pranee said.
Higher supply at a time of thin demand drove down the price of 5 per cent broken rice, a common grade offered by key Asian exporters, to US$385 to US$420 per tonne, from last month's US$400 to US$420.
But the same grade from Thailand is still pegged at US$560 per tonne by the government intervention scheme and a stronger Thai baht currency, which pushes up dollar-based export prices.
Vietnam, the world's number two rice exporter, will produce around 27 million tonnes of milled rice in the 2012/13 crop, flat with the previous year, according to an estimate by the United State Department of Agriculture (USDA).
India, which last year snatched the crown of world's biggest rice exporter from Thailand for the first time, was estimated to produce 99 million tonnes of milled rice, down 5.1 per cent from the previous year.
But New Delhi holds 35.5 million tonnes of rice stockpiles, or nearly three times the government's target of 12.2 million tonnes.
That has encouraged the Indian government to continue its policy to free up grain exports.