South China Sea tensions slow Vietnam rice trade

Tensions between Beijing and Hanoi have slowed Vietnam's rice trade and pressured prices for the grain, while plans to sell government stocks have made Thai rice more competitive, traders said on Wednesday. Vietnamese rice prices eased as sales to its major buyer China have slowed because exporters were reluctant to commit to new deals due to payment risks in the middle of a wrangle over territory in the South China Sea.
Thousands of Vietnamese angry about a Chinese oil rig moved into a part of the sea claimed by Hanoi have set fire to factories and stormed industrial zones in the south. "Although rice is still being sold to China across the northern border, the sales have slowed in recent days," a trader in Ho Chi Minh City said. Vietnam's 5-percent broken rice eased to $395-$400 a tonne, free-on-board Saigon Port, from $405-$410 last week.
The 25-percent broken rice was in a wide range between $360 and $375 a tonne, compared with $370-$375 a week ago. Traders said low stocks at a time when the major crop harvest has ended would keep prices from a steep fall. Mekong Delta farmers have completed the harvest for the winter-spring crop, Vietnam's biggest of three a year, with the yield hitting around 11 million tonnes of paddy, up nearly 5 percent from year ago, the Vietnam Food Association said in a weekly report.
Farmers have also planted 1.12 million hectares, or 66 percent of the 1.7 million hectares targeted for the summer-autumn crop, the report said. Harvesting of this crop often peaks in July. In Thailand, prices were falling as the government continued to sell rice from state stocks, adding pressure on a market already in a downwards trend.
Surasak Riangkrul, head of the Commerce Ministry's Department of Foreign Trade said the declaration of martial law on Tuesday by the Thai army had no impact on the rice selling plan and the government would continue to sell as much as a million tonnes a month.
Traders said the government sales helped to make Thai rice prices more competitive in comparison with Vietnam and India. Common grade Thai 5 percent broken grade white rice was offered at $370 per tonne on Wednesday, down from last week's $380, exporters said. That was below the same grade out of India offered at $420-$430 per tonne, they said. "Falling prices provided room for Thai exporters to regain market share on parboiled rice in Africa," said a Bangkok-based trader.