Rice prices up in Vietnam, Thailand on Indonesian demand
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Vietnamese rice prices rose around 3 percent to an 11-week high following news of a major deal with Indonesia, while prices in Thailand also edged up as the market monitored Indonesian import demand, traders said on Wednesday. Vietnam, the world’s third-largest rice exporter after India and Thailand, has won a tender to supply nearly 1 million tonnes to Indonesia, a Vietnamese government report said, as the archipelago nation struggles with a prolonged drought.
On Wednesday, Vietnam’s 5-percent broken rice advanced about 3 percent to $350-$355 a tonne, free-on-board (FOB) Saigon Port, from $340-$345 a week ago, and 15-percent broken rice stood at $345 a tonne, or about $10 above last week. At $355, the price is the highest since July 22, Reuters data show.
The 25-percent broken variety narrowed to $330-$335 a tonne, FOB basis, from a range of $325-$340 a tonne a week ago. “As prices rise, some buyers have turned to Thailand,” a trader in Ho Chi Minh City said. Pakistani rice has also become very competitive, with the 5-percent broken grain standing at $310 a tonne, FOB basis, said a dealer at a regional trading firm.
“Given the price rise, African buyers are not in the market while (Vietnamese) sellers don’t want to sell now,” he said. Traders said they expected more purchases, including from Vietnam’s biggest rice buyer China, given the price rise. Rice imports in 2015 by China, the world’s largest producer of the grain, could rise 6.7 percent from 2014 to 3.2 million tonnes, the UN Food and Agriculture Organization has said.
China has bought 1.5 million tonnes of Vietnamese rice in January-August, or a third of Vietnam’s total shipments in the period, based on Hanoi’s agriculture ministry data. China has set the rice import quota for 2016 at 5.32 million tonnes. In Thailand, prices edged up in anticipation of a contract with Indonesia, traders said.
“We already increased our prices last week to anticipate it,” a Thai trader said. “If it ends up not happening, prices will absolutely weaken.” Thai 5-percent broken grain rose to $360 a tonne, FOB Bangkok, from $350-$357 on Tuesday, but is still below the $350-$362 level a week ago. Prices have recovered from an eight-year low hit last month. Indonesia said late last month it planned to import up to 1.5 million tonnes of rice from Thailand and Vietnam in October to avert a price spike.
Questions & Answers
Q.Why has Indonesian demand for rice increased significantly?
Why has Indonesian demand for rice increased significantly?
Indonesia is struggling with a prolonged drought, which has led the archipelago nation to seek major rice imports. This has driven up demand from suppliers like Vietnam and Thailand.
Q.Which other countries are being considered by buyers due to the rising rice prices in Vietnam and Thailand?
Which other countries are being considered by buyers due to the rising rice prices in Vietnam and Thailand?
As prices in Vietnam and Thailand increase, some buyers have started to consider alternatives. Pakistani rice has become very competitive, and African buyers are currently out of the market.
Q.What is China's projected rice import volume for 2015 and what is its import quota for 2016?
What is China's projected rice import volume for 2015 and what is its import quota for 2016?
China's rice imports for 2015 are expected to rise to 3.2 million tonnes, according to the UN FAO. For 2016, China has set its rice import quota at 5.32 million tonnes.
Q.What is the risk to Thai rice prices if the anticipated contract with Indonesia does not materialise?
What is the risk to Thai rice prices if the anticipated contract with Indonesia does not materialise?
Thai traders have already increased their prices in anticipation of a contract with Indonesia. If this deal does not happen, they expect prices to weaken significantly.