Volatility in the Thai rice market created by the impacts of the coronavirus pandemic is causing buyers to shy away from letters of credit (L/Cs) and ask for the less risky option of documents against payment terms.

But as this request is for a payment method that is more risky than L/Cs for the seller, exporters are choosing not to comply with these requests.

Under such volatile conditions and amid persistently slow demand and harvest pressure, it appears that both buyers and sellers are exercising caution.

Price volatility

Since late March, Thai white and parboiled rice prices have moved sharply in both directions.

Typically, one Thai parboiled variety decreased by 7.6 per cent from US$502 per metric ton (mt) on 23 March to $464mt on 22 April. But by the end of April the price had edged US$11mt higher to US$475mt.

Not worth the risk

Three exporters told S&P Global Platts that they had limited their exposure to the rice export market in the past year.

One said that buyers have recently been requesting documents against payment rather than L/C terms but said that to agree to such requests was "not worth the risk for me".

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.