The rice trade in Vietnam has ground to a standstill following a state order to halt exports after contracted volumes hit a cap of 3.5 million tonnes set for 2004, traders said on Wednesday.
Enforcement of the limit by the government, which traders say fears flooding will lead to rice shortages later in the year, had hit domestic prices in the world's second-largest rice exporting country, the traders said.
In an emergency directive sent out to all traders, obtained by Reuters, the Vietnam Food Association said the trade ministry had made the request to ensure exports did not exceed the cap of 3.5 million tonnes.
Vietnam's rice deliveries so far this year had reached 2.6 million tonnes, with a further 900,000 tonnes of the grain contracted for export by the end of the year, state media reported.
On Wednesday, a kg of paddy fell up to 15 percent to 1,900 dong (12.1 cents), from a range of 2,100-2,250 dong last week prior to the trade ministry's rice export embargo.
Bad weather, including flash floods in northern Vietnam last week that killed at least 36 people, had prompted the trade ministry to halt additional rice exports, traders said. "It is dead quiet here, and it seems the trade ministry will not change their mind about changing the cap," said a trader in commercial hub Ho Chi Minh City, adding that exporters had all ceased quoting rice export prices.
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