MARKETS
Rice helps drive up AFET volume by 60%
Trading volume on the Agricultural Futures Exchange of Thailand (AFET) reached 37,803 contracts in the first four months of this year, up 60% from the same period last year, spurred by the sharp increase in rice contracts.

Driven by rising rice prices, 12,694 rice contracts changed hands from January to April, compared with only 1,992 in the same period last year.

In April alone, rice contracts rose to 6,658 from 482 in April, 2007.

AFET president Nitus Patrayothin said the increase in rice trade also stemmed in part from eased regulations, under which traders can settle contracts in cash or by physical delivery. In the past, only cash settlements were allowed.

Under the new regime, buyers and sellers must declare their intention for delivery to the exchange between 8:30 am and noon on the business day after the last trading day.

For buyers and sellers who did not declare their intention for delivery or whose intentions are not matched, the exchange would close out the positions by cash settlement based on the final settlement price.

Final settlement price is determined by a three-day average of the mid-interval value of the 5% white rice price announced by the Commerce Ministry's Department of Internal Trade plus a quality improvement premium of 0.30 baht a kilogramme.

Despite the recent spike in rice trade, rubber contracts were still the four-year-old futures exchange's main product. Turnover to April 30 totalled 24,731 contracts, a rise from 20,112 traded in the same period last year.

In April, the number of rubber contracts increased to 5,297 from 2,758 a year earlier. Trade in tapioca chips continues to be light, with only 378 contracts changing hands in the first four months, down from 1,503 last year.

According to Mr Nitus, interest in rice has lifted all activity on the exchange, to an average of 700 to 800 contracts per day, from 200 to 300 a year ago.

The highest daily turnover of 1,120 contracts was recorded on April 17.

The exchange expects to reach its target of 1,000 contracts per day by the end of the year.

Last year, the AFET traded 89,966 contracts valued at 29.93 billion baht, with 5% white rice accounting for 20,473 contracts, or 23%. Rubber made up nearly 75% of the turnover or 67,219 contracts, with tapioca chips and latex the rest.

''Driven by rising rice prices, AFET's trading activities are getting more active and energetic,'' said Mr Nitus. ''The market for the first time has started to draw a number of new traders with existing traders are making more transactions.''

By Bangkok Post On 17 May 2008

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