Thai rice prices remain firm as Strait of Hormuz reopening may revive demand

Thai rice prices are expected to remain firm following the announcement of a US-Iran peace deal, as improved access to Middle Eastern markets could revive buying interest amid limited supply, market sources said June 15.

The reopening of the key shipping route is expected to ease logistical challenges for cargoes destined for Iraq and other Middle Eastern destinations, which have faced disruptions in recent weeks.

The Strait of Hormuz, a vital corridor for global trade, was virtually closed amid geopolitical tensions, disrupting shipments to the Middle East and impacting global supply chains. The US and Iran said June 14 that they reached an agreement to reopen the waterway.

Market participants said any recovery in demand would provide additional support to a market that is already underpinned by tight paddy availability.

Anurak Deesirisathien, sales head of Asia Golden Rice, said fresh buying interest could emerge following the reopening, although elevated Thai rice prices may limit purchasing volumes. He added that Thai rice prices were likely to remain firm due to limited paddy availability.

Several sources said the immediate impact is likely to be seen in logistics rather than trading activity, with buyers still assessing market conditions and freight developments.

"I expect logistics for Iraqi shipments to improve once the Strait of Hormuz reopens, and I hope to see continued demand from Iraq," a seller from Bangkok said. "However, we have not yet observed any change in customer buying behavior. Thai rice prices should remain firm due to expected demand and limited supply, and any weakness when the new crop arrives is unlikely to be significant."

Other exporters said supply constraints were likely to remain the primary driver of the Thai market in the near term, with fresh crop arrivals still some weeks away.

Another Bangkok-based exporter said Thai rice prices were likely to remain firm until the arrival of the next harvest due to limited supply availability. He added that demand from Iran could also increase if sanctions-related constraints were eased, providing additional support to the market.

Pakistan sources expect gradual recovery

Market participants in Pakistan also expected trade sentiment to improve following the reopening, although most said any recovery in demand would likely be gradual rather than immediate.

"The global rice market will show signs of relaxation in some days," a seller from Karachi said. "There will likely be reemerging demand from Africa, the Gulf, and the Europe/Americas regions. However, at the current $410/mt FOB price level in Pakistan, we won't see buyers for rice here except for whatever trade is continuing with the Philippines. I feel that this situation won't improve until the new crop arrives in Karachi - unless someone has existing contracts from earlier trades they need to fulfill in the upcoming days."

Another trader said the market had yet to register a significant reaction to the reopening announcement.

"The market has not yet reacted sharply to the Strait decision, as oil supplies in Pakistan have continued regardless. Only when lower retail fuel prices are reflected will we see costs go down. For now, prices have largely remained stable, even if there are no other rice sales currently except to the Philippines," a trader from Karachi said.

Platts, part of S&P Global Energy, assessed Thai 5% WR at $464/mt FOB June 15, up $4/mt week over week, and Pakistani 5% WR at $384/mt FOB, down $1/mt week over week.

Market participants across both Thailand and Pakistan said the next key indicator will be whether improved shipping conditions translate into fresh tenders and spot purchases from Iraq and other Middle Eastern buyers in the coming weeks.