Asian rice prices rose further on Wednesday on strong demand, and the increase may result in Vietnam giving back some share of the white rice market to Thailand, traders said. Prices of Vietnam's 5 percent broken grade white rice edged up to $410-$415 a tonne from around $400 a week earlier, while the 25 percent broken grade rose to $375-$380 a tonne from $360.
The increase has raised concerns that exporters may not find takers at current levels. They may lose contracts that they have signed as they cannot compete with rival countries, Vietnam news, a state-run daily, said, quoting the Vietnam Food Association.
"Foreign buyers are now seeking to purchase at around $400 a tonne for the 5 percent broken rice, well below the current level", a trader said Vietnam, the world's second-biggest exporter, has shipped 4.27 million tonnes of rice so far this year. It aims to export around 6 million tonnes or more in 2010.
BUYERS EYE THAILAND Some buyers have started seeking white rice from Thailand as the increase has made Vietnam's prices inch closer to those prevailing in that country.
Thailand, the world's biggest rice exporter, has the opportunity to boost white rice sales after having lost some of its market to Vietnam a few years ago because of high prices. "There were some inquiries," said a Bangkok-based trader. "Buyers came back to us as they were not quite sure whether Vietnam would have enough rice to sell after committing a lot to China."
The price of Thailand's 25 percent broken grade, the same grade as Vietnam, was quoted at $415 per tonne, exporters said. Still, the benchmark 100 percent B grade Thai white rice rose slightly to $485 per tonnes, up from last week's $475 per tonne, they said.
"We need to offer at high prices to offset losses from the exchange rate as the Thai baht is very strong," another Thai exporter said. The baht was steady at a 27-month high of 31.72 per dollar on Wednesday with some traders saying they expected the central bank to stabilise the currency.
Thai rice prices were likely to stay firm for a few months, helped by the government's decision to continue its price-supporting scheme ahead of the new crop due to be harvested in October, traders said.
Prime Minister Abhisit Vejjajiva said on Tuesday his administration would maintain its price-guarantee scheme, in which the government pays farmers the difference if they sell rice to millers lower than the guaranteed price of 10,000 baht ($315.2) per tonne. Exporters said the guaranteed price and logistical costs would equate to an exporting price of $450 per tonne, which could be a strong support level for Thai rice prices for months.
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