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BANGKOK - Asian rice prices fell on Wednesday as the world’s big producing countries started harvesting, stoking concerns of oversupply as buyers stayed on the sidelines expecting prices to drop further.

Benchmark 100 percent B grade white rice dropped to $580 a ton from last week’s $585 per ton, traders said. Prices have stayed in a $580 to $615 a ton range this year on easing fears of world food scarcity.

Farmers in some well-irrigated areas in central Thailand, the world’s biggest rice exporter, have started harvesting with the new supply expected to add to downward pressure on prices.

"Prices are likely to fall further over the coming weeks as supply from the second crop is coming onto the market," a Bangkok-based trader said.

In the current 2009/10 second crop, Thailand was estimated to produce 7 million tons of paddy rice, down from a previous forecast of more than 8 million tons on lower water supply and insect infestation, according to the Agriculture Ministry.

Traders said demand was thin as buyers wait to buy at cheaper prices, expecting prices to drop further as supplies grow.

But the Thai government is widely expected to intervene and start buying rice directly from farmers to support prices.

"I don’t think the Thai government would be happy to see export prices drop below $500 per ton or domestic paddy price at below 10,000 baht per ton," an Indian trader said. - Reuters

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