Thursday, 12 June 2014

Thai rice pushes Myanmar out of Africa

Myanmar rice exporters are being undercut in the important African markets by a flood of exports as the Thai junta offloads millions of tonnes of stored rice at discounted prices, according to Myanmar rice trading officials.

Myanmar 25 percent broken rice had been commanding about US$335 per tonne in African market, a competitive price compared to previous Thai prices of $400. But the Thai military junta that came to power in a May 22 coup has lowered prices to $320 per tonne in Africa in a bid to offload rice stocks purchased during the government of Yingluck Shinawatra, Myanmar traders said.

Top Myanmar rice exporter U Law Maw Myint Maung said the price competition is slowing business in African countries, which together constitute an important market for Myanmar’s rice exporters.

“We are having lots of trouble selling rice on the world market, especially to our major African buyers,” he said.

The Thai policy to buy rice at inflated prices from Thai farmers to gain political support and then store in a bid to corner the world rice market is closely associated with the Red Shirt government of ousted premier Yingluck Shinawatra.

Thailand was thought to have about 15 to 16 million tonnes of rice sitting in warehouses last week, according to The Bangkok Post on June 5.

With much of the African market closed to Myanmar traders due to the low prices, rice exporters are relying on Chinese demand, said U Lu Maw Myint Maung.

“China’s demand for Myanmar rice is quite strong at the moment. This is a major relief for our rice market,” he said.

Rice traders say Myanmar exports about 60,000 tonnes monthly through Muse in Shan State to China at present, with prices of about $433 to $449 a tonne for 25pc broken and $490 to $497 for higher quality 5pc broken.

The European Union market is also increasingly demanding Myanmar rice, though it only accepts mostly high-end 5pc broken rice at about $410 to $420 a tonne, he said.

“Myanmar’s rice exports won’t fall too badly from Thai competition this year because demand from China and the EU are quite high,” said U Lu Maw Myint Maung, adding total exports should be between 1 and 1.5 million tonnes, with China being the largest destination.

Myanmar Rice Federation secretary U Ye Min Aung said Thailand’s move to offload its buffer stock will affect exports, “but I don’t think it will make the market collapse, as much of Thailand’s rice has been stored for a long time, and the world market prefers fresh rice.”

Myanmar’s rice export volumes are also only about an eighth of Thailand’s, which was the world’s largest rice exporter until 2012, after the Yingluck government was elected.

“We don’t need to worry too much about Thailand as we are not their rival on the world market yet,” he said. “But we will have to worry when Myanmar can produce 5 million tonnes or so a year.”

Myanmar Rice Federation chair U Chit Khaing said Thailand is also preoccupied with politics, which could offer a relief for Myanmar traders.

“I don’t think Thailand has a stable policy towards trade right now, and it’s not certain they will continue selling rice at a low price,” he said. He added diversifying export markets to more EU and Middle Eastern buyers is important for the rice industry’s future.

source: The Myanmar Times
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