BANGKOK (Commodity Online) : Thailand’s domestic tapioca prices soared to new highs and price intervention from the 2008-09 crop would end up costing the government 10 billion baht.

Tapioca prices in the market are currently around 1.65 baht per kilogramme while futures prices on the Agricultural Futures Exchange of Thailand have risen to two baht.

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Thailand government has set a benchmark of 1.70 baht per kg in its new options programme for the 2009-10 cassava crop.

Reacting to price hike, Thai deputy Prime Minister Korbsak Sabhavasu said the rising price in the market showed the government had been right to delay sales of tapioca chips and starch to private companies that offered low prices.

Thailand last week rejected a proposal to sell 200,000 tones of tapioca starch to Guangxi Mingyang Biochemical Science & Technology, a Chinese state-owned enterprise. The price offered under the government-to-government deal of 8,010 baht per tonne was deemed too low.

Korbsak said the cabinet also ordered the Commerce Ministry to sell tapioca only for export purposes with a goal to reduce volume in the domestic market. As well, selling small amounts gradually instead of large bulk orders will lift domestic prices.

He said that if the government sold large volumes, other players would have the power to control stockpiles while traders would not buy raw cassava roots from farmers.

The government still has 1.7 million tonnes of tapioca chips and 400,000 tonnes of starch in its stocks.

Korbsak said the losses from all agricultural product price-support programmes for the 2008-09 crop would be down from a previous projection of 40-60 billion baht due to high prices this year.

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