BANGKOK (Dow Jones)--Thailand has set a rice export target of 8.7 million metric tons in 2008, down from actual exports of 9.5 million tons in 2007, the Commerce Ministry said Monday.

  "We will have a smaller volume of rice available for export this year due to a decline in government stocks and negative impact from a stronger baht and rising fuel prices," the ministry said in a statement.

  The government currently has 1.8 million tons of rice available in its stockpiles, compared to 4.8 million tons a year ago, because stocks were released last year to facilitate Thai rice exports amid increased market demand after India and Vietnam banned rice exports, the ministry said.

 Moreover, the government can't replenish stocks by buying rice under the current price intervention program, because domestic market prices are much higher than its intervention prices, it said.

  For the Nov. 1-Feb. 29 program, the government set its intervention prices for white paddy rice at THB6,600 a metric ton and jasmine fragrant paddy rice at THB9,000-THB9,300/ton.

  However, domestic prices for paddy rice have risen to around THB7,500/ton for white rice and THB10,000-THB12,000/ton for jasmine rice.

  Since the program began in November, the government has bought only about 50,000 tons of rice from farmers, compared with 2 million tons of rice during the same period in the previous program, according to the Public Warehouse Organization.

  A stronger baht and higher freight costs will also put Thai rice exports under pressure, especially when major competitor Vietnam lifts its ban on new rice export contracts, which is expected around late February, the ministry added.

  However, the ministry expects rice exports in the first quarter of this year to be better than in the same period of last year, with January's exports expected to total around 900,000 tons, Apiradi Tantraporn, director-general of the Commerce Ministry's Department of Foreign Trade said.

  "Buyers are back from the New Year holidays and have returned to the market, while many existing contracts will have to be executed," Apiradi said.

  The top buyers of Thai rice in 2008 are expected to be Nigeria, Senegal, Indonesia, the Philippines, China, South Africa and Iran, she said.

  "Thailand's 9.5-million-ton rice export volume last year was beyond our expectations and export prices were significantly higher, thanks to India's and Vietnam's rice export bans as well as large government rice stock sales," she said.

  The export price of Thai rice in 2008 is expected to continue to rise, and will likely break the $400/ton level for 100% grade B rice and $700/ton for jasmine fragrant rice, the ministry said.

  Monday, Thai 100% grade B rice was offered at $380/ton, on a free-on-board Bangkok basis, and jasmine fragrant rice was offered at $663/ton.