Thai rice exporters expect a deal to sell 300,000 tonnes of rice to Iran next week. According to Chookiat Ophaswongse, the Rice Exporters' Association president, representatives from Iran had entered into business discussions with several exporters including Thai Hua Co, Chaiyaporn International Co, President Agri Trading Co and Capital Rice Co, aiming to buy 100% grade-B rice at $305 per tonne _ the same price obtained for 400,000 tonnes sold to the Iranian government at the beginning of the year. However, Thai exporters said the original offered price was below the market price of $312. They have now quoted the export price at $320, which includes additional cost for delivery according to the requirements of the Iranian government.
Iranian representatives are now shopping around for rice from the major rice exporting countries. They are also interested in buying polished rice from Vietnam.
''It is possible that we might be able to conclude the deal when they return from Vietnam (next week),'' said Mr Chookiat.
It is likely that Iran will import a huge volume of rice this year as its government is concerned over a possible trade sanction due to nuclear controversy at home.
It purchased 400,000 tonnes of rice from Thailand early this year, of which 150,000 tonnes have been delivered. Last year, it imported 160,000 tonnes from Thailand and 400,000 from Vietnam.
Normally, Iran imports about one million tonnes of rice annually.
With expected additional orders from Iran, Thailand's rice exports will likely reach the 7.5-million-tonne target in 2006.
In the first quarter of this year, rice shipments from Thailand to the international market dropped by 7.9% year-on-year to 1.79 million tonnes. The export price averaged US$317 per tonne.
Mr Chookiat said that the stronger baht since April was one of the major reasons behind the drop in the first three months as it had caused Thai rice to be more expensive than rice from other countries.
Even without the stronger baht, Thai rice is more expensive than other rice in the market due to the local price intervention policy.
''Since the baht started appreciating in April, the price of exported Thai rice has increased 4% against Vietnamese rice. The price gap is about $50 per tonne,'' he said.
As rice is a commodity with little value added, exporters cannot improve efficiency to reduce costs.
But businesses could gain profits from selling in large volumes, said Mr Chookiat.
''I would urge the central bank to signal when there are foreign inflows and how much, so we can catch up with the situation of the baht,'' he said.
