Record reserves of rice in Thailand, accumulated from a state-buying program that’s spurred concern from the International Monetary Fund, are seen contributing to lower prices next year as worldwide harvests expand.
Thailand’s government is expanding a rice-buying program it says will bring in more cash for the grain as exporters blame the policy for putting the country’s 30-year reign as the world’s top shipper at risk.
Rice prices in Thailand, the biggest exporter, may jump 50 percent by the end of the year under a plan by the party favored to win the July 3 election to buy the grain directly from farmers, said millers and traders.
Rice may rally 22 percent by yearend as Thailand, the world’s largest exporter, buys the grain from farmers at above-market rates, pushing up costs for importers and fanning global inflation even as economic growth slows.
The Thai baht’s rally to the highest level in 16 years is hindering exports from the world’s biggest rice shipper, curbing the government’s efforts to diminish record state stockpiles and threatening to increase its losses.
Rice prices will probably remain under “pressure” in coming months as global production outpaces consumption for the eighth consecutive year, according to the United Nations’ Food & Agriculture Organization.