China could see a three-fold jump in rice imports from Vietnam this year, industry officials said on Monday, as the world's biggest consumer steps up purchases to contain domestic prices. The demand from China, coupled with an industry-led stockpiling campaign, is keeping a floor under Vietnamese paddy prices even as the harvest of the major crop is peaking in the Mekong Delta food basket.
Vietnamese exporters have sold about 500,000 tonnes of rice to China so far this year, with nearly half that volume already shipped, Vietnam Food Association Chairman Truong Thanh Phong told the farm ministry-run Vietnam Agriculture newspaper. "The number of contracts of rice sold to China has been increasing quickly," an official of Vietnam Food Association told Reuters, confirming the media report.
China has been buying rice from Pakistan and Vietnam in recent months to keep a lid on domestic rice prices which have climbed on the back of government support to paddy farmers, traders said. "There is no problem with domestic supply. I think the estimated large imports could be due to cheap prices," said an analyst with a Chinese official think-tank.
A Singapore-based rice trader added: "It is not clear how much China is going to buy as it started very quietly and it is going to end very quietly." Chinese domestic milled rice was quoted at about 3,900 yuan ($619) per tonne in Guangxi, bordering Vietnam, compared with $430 per tonne for Vietnamese rice, according to the China National Grain and Oils Information Centre.
The price differential has led to about 400,000 tonnes of Vietnamese rice sold across the border to China via largely unregulated trades, the Vietnamese food association said. Last year, China imported 309,000 tonnes of rice from Vietnam, almost 150 percent more than the 124,500 tonnes bought in 2010, customs data shows. Exporters must register contracts with the food association to obtain shipping permits.
The forecast demand by China represents nearly 14 percent of the record 7.2 million tonnes Vietnam aims to export this year. If Vietnam does sell that much rice, it will overtake Thailand to become the world's largest rice exporter in 2012. Thailand, which has been the world's biggest exporter for three decades, looks set to see exports fall sharply to 7 million tonnes at most due to high prices caused by government intervention to support millions of poor farmers.
Vietnamese 5 percent broken rice prices have risen to around $435 a tonne, up from around $405 a tonne few weeks ago, thanks to fresh demand from China as well as a government-sponsored stockpiling plan aimed to keep in stock 2 million tonnes of paddy for three months ending June 15. "The prices are not likely to spike as there is a lot of rice in the world but it is certainly supporting the market," said a Bangkok-based trader. "We are looking at another $20 increase in Vietnamese prices."
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