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Vietnam’s rice gaining market share; record exports foreseen
Domestic rice prices are climbing as brokers are trying to collect rice to fulfill export contracts. Exporters have been advised to be careful when signing contracts, to be sure they will have enough rice for export.
Saigon Tiep Thi reports that the Mekong Delta rice market has come alive over the last week. Prices are on the increase. Farmers are selling lower quality IR50404 rice from the summer-autumn crop at 3,800-4,000 dong per kilogramme, and high quality long-grain rice at 4,350-4,500 dong per kilogramme. White and perfumed five percent broken rice is trading at over 7,000 dong per kilogramme.
The Price Control Agency has forecast that prices for Vietnam’s export rice will rise over the second half of 2009, responding to growing demand. Meanwhile, baht appreciation against the dollar has made Thailand’s rice much more expensive than Vietnam’s, and has motivated the Thai Government to delay plans to sell two million tonnes of reserved rice.
In the first 15 days of July, Vietnamese enterprises signed contracts to deliver another 195,000 tonnes of rice, raising the total of committed rice exports for 2009 to 5.2 million tonnes. To date, 3.85 million tonnes have been delivered, worth $1.8 billion.
Exporters’ efforts to collect rice to fulfill contracts has been driving up Mekong Delta rice prices steadily. In addition, Saigon Tiep Thi has learned that Cambodian dealers are buying up perfumed and white five percent broken rice to sell to Thai buyers.
Market favourable
Current activity belies recent forecasts that said world rice market demand would lessen. On July 22, the Philippines will issue a tender to import 75,000 tonnes. Bids will serve as the benchmark for that country’s import of 700,000 tonnes of rice from now to the end of 2009.
Information about rice prices from other big exporters like Thailand and India seems favorable to Vietnam. A source said that Thai enterprises now cannot bid for five percent of broken rice at less than $600 per tonne. Thai enterprises stocked 7,000,000 tonnes of rice at high prices before the market dipped, and are reluctant to release it at current prices. Indian plans to sell more than one million tonnes of rice have also been canceled because of the high collection price and politically uncertainties.
Malaysia has purchased 500,000 tonnes of rice from Vietnam. It will import another 100,000 tonnes of rice to the end of the year and intends to buy rice from Vietnam. Other big consumers -- Africa, the Middle East, Cuba, South Korea and Japan – are also expected to be in the market during the last months of the year, which means that Vietnamese enterprises will have opportunities to sell rice in big quantities.
Rice exporters advised to proceed cautiously
It is estimated that another two million tons of Delta rice can be put on the world market this year, after deducting provision for replanting, human and animal consumption, and food security reserves.
Bearing in mind that only about 600,000 tonnes of this amount remains uncontracted by exporters, the Vietnam Food Association has urged exporters to be careful not to promise foreign buyers more than they will be able to deliver.
Many localities have reported that 25-30 percent of their rice growing land has been planted in lower quality IR50404 rice, but the signed contracts demand high quality products. Enterprises have also been reminded by VFA that they will easily collect high quality rice from farmers as they must compete with Cambodian buyers.
Vietnam may outstrip Thailand as top rice exporter in five years
At the recent Thai Rice Conference, there was speculation among businessmen that Thailand is in danger of losing its position as the world’s leading rice exporter. First place may fall to Vietnam in five years as high offer prices restrain world demand for Thai rice.
According to the Thai Rice Association Chairman Chookiat Ophaswongse, Thailand plans to export 8-8.5 million tonnes in 2009, while Vietnam may export a record volume of six million tonnes, narrowing the gap between the two nations’ exports to 2-2.5 million tonnes from 5 million tonnes in 2009.
vietnmanet, sgtt
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