Tight supply at the end of a major crop harvest pushed up Vietnamese rice prices near those offered by Thailand, where it gained mainly on a rising Thai baht against the US dollar, traders said on Wednesday. Farmers in Vietnam's Mekong Delta have completed harvesting the winter-spring crop, and an expected rise in rice loading for the first half of 2016 means little will be left in stock, traders said.
Production of the next crop has been delayed by a drought. Quotations of the 5-percent broken rice widened this week to $365-$385 a tonne, free-on-board (FOB) basis, from $373-$380 a week ago. "There is not much in stock so we have not seen many exporters' quotations," a trader at a foreign firm in Ho Chi Minh City said. "It is even tough for some export firms to secure rice now for loading."
Vietnam's rice exports between January and June could rise 12 percent from a year ago to more than 3 million tonnes on rising demand, amid supply concerns caused by drought, the government has said. Another trader in Ho Chi Minh City said prices were purely indicative due to thin stocks, while key buyers in Asia and Africa have yet to return with fresh demand.
"Prices in Vietnam nearing Thai rice prices will lead to no purchase," he said. Thai 5-percent broken rice rose to $382-$390 a tonne, FOB Bangkok, from $371-$388 on April 11 before Thai markets closed for public holidays. Prices rose mainly due to the appreciation of the Thai baht against the US dollar, traders said, adding purchases picked up after markets reopened on Monday.
"The usual clients are gradually returning because their supplies are running low," a Bangkok-based trader said. "The price hike due to the exchange rate might have also alarmed them into buying for fear that prices might be even higher if they waited." Thailand and Vietnam, the world's second- and third-biggest rice exporters after India, contribute a combined 40 percent of global rice trade.
The UN Food and Agriculture Organization (FAO) has projected lower rice shipments from India at 10.2 million tonnes, from its previous estimate of 10.6 million tonnes in December. Thailand will ship 9.9 million tonnes, instead of 10.4 million tonnes, while Vietnam's sales abroad at 8.7 million tonnes would be unchanged, the FAO said in its April rice market report. World rice trade this year could rise 1 percent from 2015 to 44.9 million tonnes, it said, revising down the global volume from 45.3 million tonnes estimated in December.
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