Speculation about fresh orders from Indonesia pushed Vietnamese rice prices higher this week, while government intervention supported prices in Thailand even though output from the main crop is about to peak, traders said on Wednesday.
"There has been talk that Indonesia may buy up to 300,000 tonnes of rice from Vietnam, so rice exporters have pushed prices up," said a trader in Ho Chi Minh City. Indonesia's state procurement body, Bulog, has forecast that rice imports will be between 500,000 and 770,000 tonnes this year and it has been talking to sellers in India and Vietnam.
Vietnam's 5 percent broken grade rose to $455 a tonne from $445-$452 a tonne a week ago, traders said. The 25 percent broken rice was quoted at around $425 a tonne, up from $410-$420. However, higher prices eventually slowed trade as buyers held back, anticipating prices to fall given there is plenty of supply in Vietnam, Thailand and India, a trader in Ho Chi Minh City said.
In Thailand, rice prices were unchanged at relatively firm levels, holding around $100 a tonne higher than Vietnamese prices on government intervention. Thai 5 percent broken white rice was offered unchanged at $555 per tonne. The benchmark 100 percent B grade was steady at $565 a tonne, traders said. "The government intervention definitely had an impact on prices. It helped support prices," a Bangkok trader said.
But at the same time the market was aware that supply was rising and that the government had limited space to store rice, the trader added. The government renewed its price-support scheme on October 2 and will continue to pay farmers 15,000 baht ($490) per tonne for paddy in the current main crop, well above offers from local millers of around 9,000 per tonne.
It is expected to buy 15 million tonnes of paddy from the crop, equivalent to around 9 million tonnes of milled rice. That would be added to current stocks of 14 million tonnes, already a record high, taking the volume to 23 million tonnes, more than double the amount the country exports even in the best years.
However, buying slowed this week as the government is running out of warehouse space. It has been checking warehouses in Bangkok's old Don Muang airport and in army bases, although exporters say these are not suitable and grain could be ruined if stored there. India has continued to export, although in small volumes, as its late monsoon had minimal impact on production and stocks remained high.
India's common rice variety, a similar grade to Thai and Vietnamese 5 percent broken, was quoted at $390-$430 per tonne. "Small rice quantities from old deals are going to traditional destinations in Africa, including Nigeria, although no major export deal has been struck recently," said a Delhi-based trader. The harvesting of summer rice started earlier this month, with production expected to be around 86 million tonnes, down 6.5 per cent from 2011 due to this year's poor monsoon. Stocks at Indian government warehouses on October 1 stood at 23.4 million tonnes against a target of 5.2 million.
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