A pick up in Thailand's major rice harvest has weakened its export prices to one-and-a-half-month lows and made the grain more competitive against varieties of Vietnam where prices have been steady due to limited stocks, traders said on Wednesday. Thai common grade 5 percent white rice fell this week to $425 a tonne, free-on-board (FOB) basis, its lowest level since August 22, from $435-$440 last week.
"Prices in Thailand have dropped as the country is harvesting its crop," said a Vietnamese trader in Ho Chi Minh City. "The harvest plus Thailand's high stocks means prices are going to drop further." Farmers in Thailand have begun harvesting the main crop and the harvest will peak in November, with around 28.5 million tonnes of paddy expected to be added to the market. The country grows two crops a year.
Besides, the Thai government has around 18 million tonnes of rice stocks built up under an intervention scheme. "Demand isn't great and there is continued supply," said a Thai trader. Vietnam's 5 percent broken rice was little changed this week, standing at $440-$445 a tonne, FOB basis, against $435-$445 last week.
"With Thai rice (of the same grade) being cheaper than Vietnamese rice, it is difficult for Vietnam to sell to anyone now," another Vietnamese trader in Ho Chi Minh City said. Vietnamese exporters have been allocated only small quantities of rice to be shipped to the Philippines and Indonesia under two contracts signed last month, which led to the exporters limiting their buying in the domestic market, another factor to keep prices steady, traders said.
Last month Vietnam sold 200,000 tonnes of rice to the Philippines, with a two-month loading that starts on October 15. It also sold another 200,000 tonnes to Indonesia. The Philippines, one of the world's biggest rice importers and a key buyer of Vietnamese rice, is set to end purchases of the grain for this year's requirements, the country's food security chief said on Tuesday.
Vietnam is forecast to export 6.9 million tonnes of rice this year, 6 percent above last year, reflecting the country's good production, the UN Food and Agriculture Organisation (FAO) said in a report late last month. As such, Vietnam would rank as the world's third-largest in rice exports in 2014, after India with 10 million tonnes and Thailand with 9 million tonnes, according to FAO forecasts. Rice exports from the three countries this year would make up 66 percent of global rice trade, which is forecast to rise 6 percent from 2013 to a record 39.4 million tonnes thanks to more sales from India, Pakistan and Thailand, FAO has said. Vietnam is expected to reap 45 million tonnes of paddy, or unhusked rice, this year, up 1.9 percent from 2013, mainly due to a larger winter-spring crop harvest, the country's Agriculture Ministry has said.
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