Rice prices in Vietnam have risen above those in Thailand for the first time in years and the increase has forced Vietnamese exporters to default on around 200,000 tonnes, Thai traders said on Wednesday, although traders in Vietnam denied this. Vietnam's main export grade, 5 percent broken, was offered on Wednesday at $545-$560 a tonne, free on board (FOB), little changed from last week's $550-560 but up from $485-490 a tonne in early July.
The same grade of Thai rice was offered at $555 per tonne on Wednesday, exporters said, up from $540 last week. Prices in Thailand have risen sharply in the past couple of months because a new government has promised to buy grain from farmers at 15,000 baht ($502) per tonne, roughly double the market level around the time of the election on July 3. That has had the effect of pushing up prices in Vietnam, already stoked by demand from Indonesia.
"A sudden rise in Vietnamese rice caused defaults and forced disappointed buyers to come back to us," Korbsook Iamsuri, president of the Thai Rice Exporters Association, told Reuters. But a trader in Vietnam, who declined to be identified, said trade there was carrying on as normal. "Thailand can't sell rice, so they said it's not possible to buy rice from Vietnam," he said.
Kittirat Na Ranong, Thailand's deputy prime minister, confirmed on Wednesday the government would push ahead with its rice intervention programme from November, when the main crop is due to be harvested. Exporters calculate the policy could push Thai export prices as high as $870 per tonne, an uncompetitive level that could force buyers to switch to cheaper origins.
Vietnam stands to gain, even if speculation about Thai prices has dragged its own market higher, as could Pakistan or even India, which is holding swollen rice stocks and may be ready to release some onto the world market. Indian Food Minister K.V. Thomas said on Wednesday New Delhi may consider more non-basmati rice exports as part of efforts to trim its stocks.
INFLATION CONCERNS The main party in the new Thai government won the support of millions of poor voters with promises of a huge increase in both the minimum wage and the guaranteed rice price. Ministers have since insisted on the need to raise incomes. It has played down worries that its wage and rice policies would fuel inflation. Fears are also growing that a jump in the price of rice, a staple in many Asian countries, could add to inflationary pressures elsewhere. The World Bank said this week that global food prices were already at three-year highs.
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