SINGAPORE (Dow Jones)--Asian rice prices have tumbled in recent months and will likely remain subdued this week due to a lack of demand and the pressure of harvest in Vietnam and Thailand.
The world's largest importer, the Philippines, which usually makes annual rice purchases in November and December, has so far stayed away from the market, belying exporters' hopes. Its imports are likely to fall sharply this year.
The International Grains Council Friday revised downward its forecast for Philippine rice imports in the marketing year to June by 17% to 2.0 million metric tons, while making significant upward revisions in its global rice inventory data.
Traders said Philippine imports may even be lower, less than 1.5 million tons.
London-based IGC raised its forecast for global rice output in 2010-11 by 3.6 million tons to a record high of 452.2 million tons, citing expected higher production in China.
The IGC said that due to higher rice production in India and the U.S., closing stocks in the top five exporting countries, including Thailand, Vietnam and Pakistan, will climb 7% on year to a record 29.8 million tons in 2010-11.
Unless strong demand comes in from Indonesia and the Philippines soon, prices aren't expected to rise this month, said Korbsook Iamsuri, president of Thai Rice Exporters Association.
With the world reeling under the impact of tight supply of most agricultural commodities, rice is an exception as ample stocks have kept a check on prices, which are currently 50% of their record 2008 level of around $1,000/ton.
Unlike other grains, where speculative funds and futures trading play a major role in price movements, rice is governed by actual physical demand and supply, said Korbsook.
Thai white rice is currently being offered around $510/ton, free on board, down from $535/ton two months ago.
The price of Thai 25% broken rice is $470/ton, down from $480/ton in mid-November.
In Vietnam, pressure from the ongoing harvest of the country's main rice crop has dragged down prices by up to $40/ton since last week and exporters are offering the grain well below the government-set minimum export price.
The 25% broken Vietnamese rice is now being offered around $430/ton compared with the state-set minimum price of $498/ton.
In Pakistan, rice export prices have declined by at least $15/ton since the beginning of the month due to weak buying interest.
"Many grain traders have turned their focus to wheat exports as the demand for rice is limited," said Raja Lal Chand Essrani, president of Raja Brokers, a Karachi-based trading company.
He said 25% broken, IRRI-6 regular rice is being offered around $415/ton, FOB and 5% broken, silky, polished rice at $450/ton.
Bangladesh and Indonesia have emerged as major Asian rice importers in recent months but ample global supply implies that their purchases have failed to push up prices.
