Floods may damage quarter of Thai rice crop, exports hit

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(Reuters) – - Thailand may lose a quarter of its main rice crop in the nation’s worst flooding in decades, the government estimates, which could boost prices of the staple and further squeeze shipments from the world’s top exporter.

The flood damage to rice comes at a time when Thailand, which accounts for about 30 percent of global trade, has in place an intervention scheme that is likely to push prices even higher, encouraging buyers to seek alternative origins.

A rally in the market for Asia’s main staple could stoke tensions across a region where several nations are struggling with a double-digit increase in food inflation, although ample global reserves and new supplies in the pipeline are expected to keep buyers calm for now.

Reuters

“The 6 million tonnes damage (to rice paddy) is just an initial estimate. We need to conduct a survey again after flood water recedes,” Apichart Jongsakul, head of the Office of Agriculture Economy, told Reuters, adding that the figure, which is a 50 percent jump from early estimates, referred to the main crop.

As a result Thailand may not be able to meet its rice export commitments to Indonesia, the Indonesian trade minister said on Friday, forcing Southeast Asia’s largest economy to explore other sources.

“I just received information that they (Thailand) don’t appear to be able to fulfill their commitment to sell and ship rice to Indonesia,” Trade Minister Gita Wirjawan said. “Thus we are trying to find a solution…there are several alternatives.”

The worsening flood situation could cut Thai production to 19 million tonnes of paddy, Apichart said, nearly a quarter down from the previous forecast of 25 million. Thailand has a second smaller crop producing around 7 million tonnes a year.

Thailand has seen about 1.6 million hectares (3.8 million acres) of farmland inundated, forcing the government to cut its estimate for this year’s main crop by 24 percent.

The floods, which have covered around a third of the country, have killed up to 377 people since July.

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The price of benchmark 100 percent B grade Thai white rice is expected to jump as much as 34 percent to…

Full story from Reuters at http://goo.gl/uNIGB