April 6 (Bloomberg) -- Thailand, the world's biggest rice exporter, ruled out selling some of the 2 million metric tons of the grain it has stockpiled as global prices rise to records.

Supplies will increase in the coming months as about 6 million tons of milled rice enters the market from the nation's April-June harvest, said Commerce Minister Mingkwan Sangsuwan.

``There is enough rice supply for domestic consumption'', Mingkwan told reporters late yesterday in Nonthaburi province, near Bangkok. ``The current shortage has been caused by some hoarding and panic buying on concern the price will rise further.'' There is no need to reduce exports, he said.

Rice, the staple food for about 3 billion people, has nearly doubled in the past year on increased imports by the Philippines, the biggest buyer, and as China, India and Vietnam cut exports. Record food and fuel prices have stoked inflation, contributing to strikes in Argentina, riots in Ivory Coast and a crackdown on illicit exports in Pakistan.

``With its decision to maintain the rice stockpile, the Thai government wants farmers to fully benefit from the high prices as a new harvest comes to the market,'' Sumeth Laomoraphorn, president of C.P. Intertrade Ltd., Thailand's sixth-largest rice exporter, said by telephone today.

Mingkwan, who yesterday met with traders and government officials, had earlier proposed selling 200,000 tons of stockpiled milled rice to increase local supplies.

Stricter Inspections

The ministry has added to the number of officials who inspect rice millers, warehouses and retailers to prevent hoarding of the commodity, said Mingkwan. The government has no plans to reduce rice exports because supplies are adequate to cover overseas orders, he said.

The retail price of average-grade rice, the country's most consumed grain, rose to a record 26 baht (82 cents) a kilogram, an 11 percent increase from a week earlier, according to the commerce ministry's Web site. That prompted some industry figures to disagree with the government's decision not to provide more of the grain.

``The release of state stockpiles should be made urgently to ease rice shortages in the domestic market,'' Pramote Vanichanont, Honorary President of the Thai Rice Mills Association, a trade group of rice millers, said after the meeting with Mingkwan. ``Most Thais, especially the poor, are suffering from the surge in prices of rice, which is their basic necessity.''

Export Caps

The government should cap rice exports at 900,000 tons a month to prevent potential domestic shortages, Chookiat Ophaswongse, president of Thailand's Rice Exporters Association, said after the meeting.

The Southeast Asian nation may be able to deliver as much as 1.2 million tons of rice a month, Prasert Gosalvitra, head of the rice division of the farm ministry, said in an April 4 interview. Thailand has shipped about 1 million tons a month this year, according to traders.

The country's rice shipments may drop in the next few months because exporters are reluctant to take large advance orders on concern they could miss out on further gains in prices, Intertrade's Laomoraphorn said.

``They are taking orders for only the quantity of rice they can buy into their warehouses,'' he said. ``So, global supplies of rice will continue to be tight in the next few months.''

The World Bank estimates 33 countries face potential social unrest because of increasing food and energy prices, Robert Zoellick, the bank's president, said in a speech posted on its Web site April 2.

To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

Last Updated: April 6, 2008 00:57 EDT