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Tough times for rice exports

Released at: 12:22, 22/07/2016

Tough times for rice exports

Photo: Duc Anh

Falling prices and lower export quantities expected to continue into the future.

by Nam Phuong

The rice price has continued to decline in the Mekong Delta according to the General Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt Production.

In An Giang province the price for unprocessed IR50404 rice fell from VND4,200 ($0.18) per kilogram to VND4,000 ($0.17) between July 11 and 15, while OM 2541 rice fell from VND4,600 ($0.20) to VND 4,500 ($0.201) and OM 2717 from VND4,800 ($0.21) to VND4,700 ($0.21).

In Vinh Long province during the week from July 10 to 16, the price of unprocessed IR50404 rice was around VND4,100 ($0.183) per kilogram and processed rice around VND4,800 ($0.21). In Kien Giang, small grain rice was sold for around VND5,300 ($0.23) per kilogram and long grain rice about VND5,600 ($0.25). The free-on-board (FOB) price for 5 per cent broken rice from the summer - autumn crop fell to $360 - $365 per ton.

The falling rice prices are due to rice importers waiting for similar falls in Thai rice prices. On July 25, Thailand’s Ministry of Commerce will open bidding for the sale of 3.7 million tonnes of rice to reduce its stockpile to 6 million tonnes.

About 2.18 million tonnes will be sold to rice exporters and 730,000 to domestic consumers, while low quality rice will be sold to companies for other purposes.

According to the Vietnam Food Association (VFA), the lull in the rice export market since February is expected to continue into the future. VFA has therefore decided to cut the 2016 rice export target to 5.65 million tonnes from 6.5 million.

In the first quarter the rice price increased thanks to contracts signed last year with Indonesia and Philippines. After that, however, the price began heading down. In April rice exports totaled 450,000 tonnes, down 30 per cent year-on-year, in May 400,000 tonnes, down 23 per cent, and in June 2.657 million tonnes, down 2 per cent.

Major importers of Vietnamese rice have not showed any signs of importing more in the near future, especially traditional markets in Southeast Asia, VFA said.

At the end of June the national food authority in the Philippines said the country has sufficient rice to last from July to September, meaning it is in no hurry to import additional quantities. The largest rice importer of Vietnamese rice, China, which accounted for about 35 per cent of Vietnam’s total in the first half, is now buying less.

The Chinese Renminbi is also becoming weaker and this is an additional obstacle for Vietnamese rice exporters in selling rice to the country. Fortunately, though, rice demand in China is forecast to remain high.

The African market is the only bright spot for Vietnam’s rice exporters. In the first half of this year imports to the continent increased almost 11 per cent year-on-year.

The Ministry of Industry and Trade is planning to organize a conference on rice exports at the end of July to address the difficulties facing exporters.

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