Asian rice prices may have found a base around $400 a tonne amid signs that only modest amounts of Thailand’s rice mountain are coming to market.

 The Thai government has had a little success in offloading part of its estimated 15 million tonnes of inventories, and has also taken modest steps to lower the scale of its subsidy scheme, which created the huge stockpile in the first place.

 Thai benchmark 5 percent broken rice  was at $420 a tonne in the week to Nov. 7, and it has been in a narrow range around this level since mid-September.

 It is down 25 percent from the $570 a tonne it fetched at the end of last year, a decline that has narrowed the gap between Thai rice and its Vietnamese competitor.

 Vietnamese 5 percent broken was at $402.50 last week, down only 3.6 percent since the start of the year.

 At current prices, the Vietnamese grade is at a discount of 4.2 percent to the Thai rice, down from a gap of 25 percent at the beginning of 2013.

 This is the closest gap between the two benchmarks since October 2011, just as the intervention scheme launched by the then newly elected government of Thai Prime Minister Yingluck Shinawatra was taking effect.

 It was always likely that Thai rice prices would have to drop to be more in line with those from Vietnam once Yingluck’s government decided it would have to sell stocks, even if that meant booking substantial losses.

 The question is whether rice prices can stabilise around current levels or whether further declines are likely.

 The answer depends on what the Thai government does. If it continues the current practice of selling some of the stocks but not flooding the market, then it’s likely prices have found a floor.

 This is because sellers from Vietnam and other major exporters such as India are likely to withdraw supplies if prices do drop much further.

 The post-2008 global recession low for Vietnamese rice was $345 a tonne in July 2010, and it would probably take dumping from Thailand to drive prices down to those levels.

 It also appears that the Thai government is still struggling with its plan to lower the stockpile through government-to-government deals.

 China, the world’s biggest rice consumer, has agreed to buy 1 million tonnes from Thailand, but over a five-year period and from private firms.

 This contradicts claims by Thai Commerce Minister Niwatthamrong Bunsongphaisan that a Chinese state-owned company had agreed to buy 1 million tonnes annually, and half of the first year’s shipment will be delivered in December.

 His predecessor also invited ridicule for claiming in September last year that 7.3 million tonnes of rice had been sold to foreign governments, but no confirmation of these deals was ever offered and traders said no shipments left ports.

 At best the Thai government has a case of Winston Churchill’s “terminological inexactitude”, but even if the sometimes farcical administration of the scheme is put aside, it’s clear that selling rice is not easy right now.

 Thailand exported about 4.6 million tonnes in the first nine months of 2013, down about 8 percent from the same period last year.

 Exports totalled 6.9 million tonnes in 2012, which was well down on the record 10.6 million tonnes shipped in 2011, before the impact of the intervention scheme.

 The scheme paid farmers 15,000 baht ($476) a tonne for paddy rice, which equates to about $750 a tonne for milled rice.

 This meant Thai rice was uncompetitive on world markets and buyers simply turned to supplies from Vietnam and India, both of which overtook Thailand in total exports.

 The government has extended its scheme for the 2013/14 crop, the main part of which is harvested this month, but has said it will only purchase 16.5 million tonnes of paddy out of expected production of 38-39 million.

 This means more Thai rice will be available on the open market from early next year as farmers won’t be able to sell all their crops to the government.

 This will ensure that prices won’t rise, but whether they fall from current levels depends on how much supply comes to market, and whether competitors in India and Vietnam are prepared to lower their quotes in order to maintain market share.