Business Recorder: The Thai government has signed a contract to sell 250,000 tonnes of rice from its stocks to Iran in a government-to-government deal and aimed to sell more to Asian governments, Thailand’s commerce minister said on Thursday. Business Recorder
The Thai government has signed a contract to sell 250,000 tonnes of rice from its stocks to Iran in a government-to-government deal and aimed to sell more to Asian governments, Thailand’s commerce minister said on Thursday. The deal comes as Thailand is stepping up efforts to sell rice from its stockpiles in order to get fresh funds for an expensive price-support scheme and to make way for grain from coming crops.
“It’s the 100 percent white rice grade and delivery is due to start in October,” Niwatthamrong Bunsongphaisan told reporters. Niwatthamrong said the rice was sold to Tehran on a cost and freight basis (C&F), but he declined to reveal the price and the total value.
However, the price of 100 percent grade white rice was offered at $520 per tonne, free on board basis (FOB), traders said. Despite Western sanctions on Tehran, Niwatthamrong said there is no problem about Iranian payment as rice is classified as “food” item, which is excluded from the sanction list. A senior commerce ministry official said the deal was not a barter deal, but Iran would open a letter of credit and pay cash as usual.
Traders and industry officials said the size of the deal with the Iranian government was not very big compared with what Iran normally bought. Iran used to buy around 1.2 million tonnes annually from Thailand, but the purchase dropped sharply after the sanctions. However, Tehran still bought rice indirectly via the Dubai port.
Niwatthamrong also said he targeted to sell more rice in government deals with China, Malaysia, the Philippines and Indonesia. However, traders said they were sceptical about demand and prices as most of the targeted countries were believed to be well-stocked and could wait to buy fresh grain at cheaper prices later in the year when major producing countries started harvesting their bumper crops.
India, which is due to start harvesting by September, is forecast to produce 108 million tonnes of milled rice in the 2013/14 main crop, up from 104 million tonnes in the previous year, according to the United States Department of Agriculture (USDA). Thailand would produce 21 million tonnes, up from 20 million tonnes, in its main crop while Vietnam was expected to produce 27.8 million tonnes, up from 27.6 million tonnes, the USDA said.