Thailand suspends rice auctions to limit supply before November harvest

BANGKOK (Reuters) - Thailand will temporarily stop holding state rice auctions to avoid oversupplying the market ahead of the annual crop harvest in November, the country's rice committee said on Wednesday (Sept 14).

"Rice sales will have to be suspended for now. We have to wait for a new harvest to arrive in November and see what's next," Prime Minister Prayut Chan-o-cha told reporters after a rice committee meeting on Wednesday.

Thailand has exported 6.57 million tonnes of rice so far in 2016, the Commerce Ministry said on Wednesday. It aims to export a total of 9.5 million tonnes of rice this year.

Thailand is the world's second-biggest rice exporter after India and has stocks of about 8.4 million tonnes left over from a rice-buying scheme under the previous government that paid farmers well above market rates for their rice.

The current military government in Thailand has been trying to sell off stockpiles from the scheme through several state auctions since it took power in 2014.

Drought in rice producing countries, including Thailand, has cut supply to global markets and given the Thai government an opportunity to accelerate sales this year.

But Thailand plans to hold off state auctions to avoid oversupplying the market, said General Prayut, who also serves as head of the rice management committee.

He did not say when auctions would resume.

Thailand expects to harvest 23.55 million tonnes of rice between October to December this year, said Wiboonrak Ruamrak, chief of the commerce ministry's department of internal trade.

The government wants the state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) and rice millers to buy some 10 million tonnes at market prices out of the 23.55 million tonnes, said Wiboonrak, in order to take it off the market for three to four to months.

The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) will store 2 million tonnes while the government will help pay rice millers to store the remaining 8 million tonnes, she said.

Thailand's junta has sold more than 5 million tonnes of rice in a series of auctions since taking power in May 2014.

It plans to clear the stockpiles by the end of 2017.