DOW JONES NEWSWIRES


  Report Highlights: Domestic and export prices increased significantly by 5-9
percent, particularly for white rice and parboiled rice due to limited domestic
supplies of paddy following the extension of the mortgage scheme to the end of
September, according to a U.S. Department of Agriculture attache report posted
Monday on the Foreign Agricultural Services Web site.

  Estimates contained in attache reports aren't official USDA data. The text of
the attache report follows.

  Market Tone

  Despite a retender of government stocks (282,802 tons of white rice and 9,420
tons of fragrant rice) on September 7, domestic and export prices increased
significantly by 5-9 percent, particularly for white rice and parboiled rice. A
sharp increase in prices reflected last week's unexpected government approval
to extend the MY2008/09 second-crop intervention program (mortgage scheme) to
the end of September for a total of 6.0 million tons of paddy. The Government
undertook this action due to price declines during the month of August after
the program ended on July 31. Intervention prices remained unchanged at 10,800
- 12,000 baht/ton ($309 - $343) for white rice paddy, which are approximately
30 percent higher than market prices.

  The expansion of the mortgage scheme toward the end of off-season crops has
resulted in limited availability of supplies of white rice paddy for parboiled
rice production. As a result, exporters are struggling to secure parboiled rice
to fulfill contracts, particularly to African countries, which ought to be
delivered no later than November.

  The Government will implement the rice price insurance scheme on October 1,
2009 with a budget of 25 billion baht ($735 million). Insured prices have been
finalized at 10,000 baht/ton ($296/MT) for white rice paddy, 15,300 baht/ton
($453/MT) for fragrant rice paddy, 14,300 baht/ton ($393/MT) for provincial
fragrant rice paddy, and 9,500 baht/ton ($281/MT) for glutinous paddy. However,
the eligible tonnage has not been finalized but is expected to be 20
tons/farmer. The compensation will be based on the difference between insured
prices and the benchmark prices that will be derived from market prices. The
formula for the calculation of benchmark prices will likely be finalized in the
coming weeks.

  Rice Export Update

  Unofficial exports (excluding fragrant rice) for Aug. 31 - Sep. 6, 2009
totaled 105,702 tons, down 34,029 ton from the previous week, and down 15,283
tons from the four-week moving average of 120,985 tons. Exports of white rice
during Jan. 1 - Sep. 6 totaled 4,071,411 tons, as compared with 5,988,260 tons
in the previous year.

  According to the Department of Foreign Trade, Ministry of Commerce, total
rice exports (including fragrant rice) during Jan. 1- Aug. 28, 2009, amounted
to 5,737,738 tons, down 24.2 percent from 7,568,477 tons in the previous year.


  -Dow Jones Newswires