Bangkok, Aug 14 - Thailand plans to release 2.1 million tonnes of rice to exporters by the end of September, the country's commerce minister said, in a move that would swell domestic supplies and put more pressure on falling world prices.
The stocks are old rice bought from farmers since 2005.
"We need to sell all 2.1 million tonnes by Sept. 30 to prepare warehouse space for the next buying scheme due to start in November," Commerce Minister Chaiya Sasomsab told Reuters on Thursday.
The news comes as global rice prices are weakening, with traders saying the additional supply from Thailand, the world's biggest rice exporter, could further weigh on the market.
"The debate to sell government stocks has been going on for some time," said one rice trader based in Singapore. "This might dampen prices to some extent."
Stocks were expected to rise by a third, to around 2.82 million tonnes after the government bought 1.2 million tonnes of paddy -- equivalent to about 720,000 tonnes of milled rice -- from farmers under a buying scheme begun on June 15.
"We need to deal with the 2.1 million tonnes first, otherwise it will deteriorate and we wouldn't be able to sell it at good prices," Chaiya said.
The government is paying farmers 14,000 baht ($415) per tonne for paddy rice, equivalent to around $700 per tonne of milled rice, in a bid to support domestic prices during the months of July-September, when supply usually peaks.
Agriculture Ministry data shows Thailand produced a record 8.8 million tonnes of paddy in its second crop this year, above a forecast 7.6 million, as farmers rushed to grow more after prices surged in April.
Chaiya said the government had no plan to extend the current buying scheme, which is set to expire on Sept. 30. However, the government is expected to support prices again from November, when the main crop comes on to the market.
"Production has peaked and there will be no more rice for us to buy by Sept. 30," Chaiya said. "We'll start buying again when the main crop comes."
Thailand is expecting 23.8 million tonnes of paddy from its main crop, little changed from 23.3 million in the previous year.
Besides selling stockpiled rice to exporters, the government was also in talks with foreign countries about sales in government-to-government deals, Chaiya said.
"The final decision will be made by the prime minister," he added.
PRICES TO FALL
The price of Thai benchmark 100 percent B grade white rice, which has fallen 35 percent from a record $1,080 per tonne in April, was expected to fall below $700 per tonne over the next few weeks, exporters said.
"Prices will drop, definitely, due to the psychological effect, as the market realises that supply is increasing," said Chookiat Ophaswongse, president of the Thai Rice Exporters Association.
Another exporter said: "The 100 percent B grade white rice prices wouldn't stay at $700 per tonne if exporters could buy rice from the stocks at less than 14,000 baht per tonne."
Exporters were believed to be offering to buy the government's rice at below 10,000 baht ($296) per tonne, traders said.
The 2.1 million tonnes in stock was bought during former buying programmes at prices of around 6,000-9,000 baht ($178-$267) per tonne, well below the current 14,000 per tonne.