Bernas expects price of rice to soften soon

KUALA LUMPUR: Padiberas Nasional Bhd (Bernas) sees the price of rice falling as major rice-producing countries are projected to have a bumper harvest from August.
The company has also struck a deal with a rice mill in Thailand to secure the supply of rice and sees more of such arrangements with other mills in the country.
“We think the price of rice will soften and are cautious about the Government entering the market now to buy a big block (of rice),'' managing director Bakry Hamzah said after the company AGM yesterday.
Bakry's caution comes as the price of rice has softened from just over US$1,000 a tonne to about US$870 now for benchmark Thai White Rice.
He expects prices to ease more as Vietnam, the second largest rice exporter in the world, may see production increase by about 18%, and India, which has an export ban, is projected to produce an extra 2 million tonnes.
Bakry Hamzah (left) and Datuk Wira Syed Abdul Jabbar at the AGM.
Bakry said he believed the benchmark Thai White Rice would fall to US$720 a tonne and the forecast bumper crop would cause uneasiness among rice millers abroad who might have hoarded the crop in anticipation of higher prices.
“We will buy when rice meets our target. It's not a matter of time but price,'' he said.
He added that the right price for big purchases from Bernas would be when rice was below US$600 a tonne, a price Bernas would face right for it to be able to overcome the circumstances it faced now.
“At high prices, Bernas will make a loss,'' said chairman Datuk Wira Syed Abdul Jabbar.
Bakry's comments were in response to questions over the supply of 200,000 tonnes of rice that was scheduled to be shipped into the country by August and a further 300,000 tonnes from Thailand.
To improve rice supply, Bakry said, it had entered into an arrangement with a mill in Thailand where Bernas would buy the paddy and supply it to the mill for processing. Bernas would then buy the rice from the mill at an agreed price.
He said the arrangement would lead to a supply of 60,000 tonnes a year. “If it works, we will extend it,'' he said, adding that foreign companies were prohibited from buying equity stakes in rice mills in Thailand.
He said the deal with the rice mills was done because obtaining supply was difficult once the price of rice surged.
Bakry also said there was a RM1.75bil benefit to the Government after Bernas was privatised. Much of the benefit comes in the form of savings in grant, corporate taxes and social obligation.
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