Thai rice prices are expected to hold steady over the next week, backed by a state-buying scheme and tight supplies at the end of the harvest. Thai 100 percent grade B was offered at $300 per tonne, free-on-board (FOB) Bangkok on Thursday, up from last week's $298. It was $220 a year ago. "Supply is very tight. Exporters can not buy rice in the open market because farmers have been selling aggressively to the government," said one trader.

The domestic price of 5 percent white paddy was steady at 10,500 baht/tonne on Thursday from a week ago.

Traders said the government had bought around 3 million tonnes of paddy since it launched the buying scheme in November, when it said it wanted to buy 9 million tonnes by the end of March.

Under the scheme, the government buys paddy at higher than market prices to support domestic prices. Farmers can sell rice either to the government or private millers depending on the price offered.

Trade has been sluggish with overseas buyers on the sidelines, dealers said. "They cannot take it. The price is too high," said one.

Traders said Iran, a major buyer of Thai rice, had bought 60,000 tonnes of 5 percent broken grade from Vietnam at $296 per tonne, free on board (FOB) for April shipment.

Copyright Reuters, 2005