Cheap rice cannot find buyers

A report of the Vietnam Food Association (VFA) showed that Vietnam exported 2.151 million tons of rice of different kinds in the first 4 months of the year, worth $942 million, an increase of 23.5 percent over the same period of the last year. 

By the end of April 2013, Vietnamese enterprises had signed the contracts on exporting 4.231 million tons, of which 2.08 million tons would be delivered from May.

The rice export price in April decreased further by another $10-15 per ton compared with March due to the low demand and the big supply when enterprises tried to sell rice to get back money.

As such, the 4-month export price was $28 per ton lower than that of the same period of the last year.

In the domestic market, the rice price has fallen by VND200-300 dong per kilo after the national campaign of buying 1 million tons of rice for storage in mid-April.

However, the biggest problem now is that though the price has fallen to the deepest low, Vietnam’s rice remains unsalable.

VFA said that the export contracts signed in the first four months of 2013 were mainly the ones with the low prices signed with China, the Philippines and African countries. Meanwhile, concentrated contracts (the contracts implemented following the inter-government agreements) with Cuba and Malaysia just accounted for 10 percent of the total promised exports.

Vietnamese rice exporters have been put on tenterhooks since the rice price in the world has been decreasing dramatically, while the exports have been going very slowly, which anticipates the big loss for exporters.

Despite the big gap between the Vietnamese and other exporters’ prices, $380 per ton for 5 percent broken rice vs. $420-530, foreign importers still hesitate to buy Vietnam’s rice, because they fear the prices may go down further. 

Millions tons of rice would be unsalable?

Analysts believe that the world’s market would not warm up by the end of the year because of the oversupply and the low demand. 

Chair of VFA -- Truong Thanh Phong, said Thailand now has 17 million tons of inventory rice, while the figure would climb to 20 million tons by the Thai main crop in November which is expected to provide another 15 million tons.

Phong thinks that the profuse supply would force Thailand to sell rice now, or at least prior to November, when the main crop is harvested. 

Other sources have said India’s inventories have climbed 35.5 million tons, which is triple the government’s targeted level of 12.2 million tons.

Buyers do not hurry to buy rice at this moment. African importers tend to be slower than expected and they seem to wait for the rice prices to go down further. The Philippines has shown its strong determination for cooking self-sufficiency and the plan to export rice by the end of 2013, even though it has signed a contract on buying 187,000 tons of rice from Vietnam.

There has been no sign showing that Indonesia would return to the market, while FAO has predicted that the country would have the record high output in 2013, reaching 72.1 million tons. This means that Indonesia also tends to reduce the imports step by step.

Vietnamnet