BANGKOK - Deals for up to 100,000 tons of Thai rice are at risk of default because of a fall in prices this year, traders said on Monday, adding that some deals were already thought to have failed. One exporter, who declined to be identified, said the size of the contracts was generally small at about 5,000 to 6,000 tons, but the overall amount affected could reach 100,000 tons.

 "The size of contracts is not big. However, the overall amount that Thai exporters have been hurt by the defaults could reach 100,000 tons," the Thai exporter said.

Many exporters are renegotiating with international trading houses to avoid losses as buyers are asking for lower prices, said Korbsuk Iamsuree, president of the Thai Rice Exporters Association.

Thai rice prices have fallen 25 percent this year, with benchmark 100 percent B grade white rice dropping from $600 per ton to $450.

Korbsuk, as well as traders, said they expected prices to fall further because of thin overseas demand while supplies from the world’s major exporting countries were seen at a relatively high level.

"At the moment, we don’t expect to see any sharp drop in rice production caused by the drought as the rainy season has come," Korbsuk said.

She said the spread of plant pests, which usually occur at the end of the rainy season, could hurt supplies and help prevent prices from falling significantly.

However, prices lacked any momentum to rise higher as buyers were staying on the sidelines, waiting to buy at lower levels.

Traders said government rice stocks were an additional negative factor that weighed on prices.

The Thai government holds up to an equivalent of 6 million ton of milled rice it bought from farmers in a previous intervention programme which aimed to prop up prices.

The government had no clear plan on how and when it would release the stock.

With thin foreign demand, Thai 2010 rice exports were expected to miss a target of 9.5 million-10.0 million tons set early this year. - Reuters