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Rice export prices rose in Thailand and Vietnam this week as bad weather threatened to disrupt supply, with Thai rice propped up by a stronger baht and potential rise in demand from the Middle East and Africa, traders said on Wednesday. Thai 5-percent broken rice rose to $371-$383 a tonne, free-on-board (FOB) basis, from $365-$371 last Wednesday, while the same grain in Vietnam edged up to $380-$385 a tonne, from $375-$385 last week, traders said.
A severe drought is affecting production in the Mekong Delta food basket, while coastal Vietnam also suffers from one of its worst salinations, prompting stockpiling by both domestic traders and farmers in the world's third biggest rice exporter. Salination and dryness have affected 160,000 hectares (395,000 acres) of rice so far this year in the Delta, or about 10 percent of the total area planted under a key crop, according to the Agriculture Ministry of Vietnam.
Thailand is also facing its worst water shortage in two decades, but traders neglected the annual weather disaster in the world's second biggest exporter of the grain and attributed the price hike to a stronger baht. "Customers don't find Thailand's drought alarming anymore, because we face drought every year," a senior trader in Bangkok said. Thai baht devalued for more than 4 percent against the US dollar since mid-January until late last week when the baht/dollar rate started picking up slightly.
A rebound in oil prices may also strengthen purchasing power of some oil-producing countries in the Middle East and Africa including Nigeria, once Thailand's main importers, another Bangkok-based trader said. Despite a threat in supply, both countries saw little or no deals signed from overseas importers due to the price hike, meaning the quotations for the rice grades were indicative rates.
"Most of the purchases are domestic, with the state reserves department accumulating to ensure food security and Vinafood 1 buying to deliver existing offers," said a Ho Chi Minh City-based trader. "Right now it is the exporters like us who are suffering," another Ho Chi Minh City-based trader said.

Copyright Reuters, 2016

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