New demand for Vietnam's rice seen up

29.11.2016

Africa, the Philippines and Indonesia are expected to buy a combined 1 million tonnes of rice from Vietnam, the world's number two exporter of the grain, by the end of this year if prices ease as expected, traders said.

"The buying demand is there but traders are not rushing now, waiting for prices (in Vietnam) to ease," said a trader at a foreign firm in Ho Chi Minh City, Vietnam's grain trading centre.

"There is a possibility that demand for the whole year will be higher than 3.5 million tonnes," another trader said, referring to the government's rice export target for this year.

The traders, speaking late on Thursday, estimated Vietnam had signed contracts for between 2.7 million and 2.8 million tonnes so far this year. The country, capable of exporting 4 million tonnes of rice a year, shipped 3.82 million tonnes in 2003.

They also said their contracted volume estimates had excluded memorandums of understanding Vietnam sealed early this year with several buyers, including Cuba and Russia.

"Indonesia is busy with its election, but buyers there will return later," the second trader said, adding there were also inquiries for Vietnamese rice from South America, including Brazil.

The traders said new demand was expected from Vietnam's other key rice buyers the Philippines, and several countries in Africa. On Wednesday, Trade Minister Truong Dinh Tuyen told Reuters the government's target of exporting 3.5 million tonnes of rice could be raised, if domestic prices eased.

The Trade Ministry curbs the rice export target to help control inflation, which last month hit 8.3 percent from a year earlier, above the government's target of keeping it at five percent for the whole of 2004.

Food prices, which account for 46.7 percent of Vietnam's consumer price basket, surged in March and April as exporters scrambled to buy rice to meet delivery commitments.

Tuyen said local prices were expected to ease this month in line with the peak of harvest in the Mekong Delta. He said normally the summer-autumn paddy price was 1,500 dong per kg, while this year it had been at around 1,800 dong (11.5 cents).

The two traders said the harvest would end early next month.

One said the Trade Ministry had sent a team to the Delta to survey rice stocks and contracts signed by exporters to work out plans for the rest of the year.

Traders said they expected a new export target to be announced next month.

"Many exporters are concerned and dare not sign new contracts as they are afraid the volume they commit to may exceed the target," a trader said.

Vietnam exported 2.25 million tonnes in the first half of this year, down 3.3 percent from a year earlier, government data shows.

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