Vietnamese and Indian rice prices rose this week following strong demand from Bangladesh, though Thailand's high prices were starting to put off buyers, traders said on Thursday. Bangladesh has emerged as a major importer of the staple grain this year as it grapples with depleted stocks and record local prices following flash floods.
The country could import as much as 1 million tonnes this year to replenish reserves, Badrul Hasan, the head of the state grain buyer, told Reuters. The South Asian country is set to slash import duty on rice to 10 percent from 28 percent while the central bank has ordered banks to allow private traders to import rice without any deposit against letters of credit.
Expectations of demand, especially from Bangladesh, have pushed Vietnamese prices higher since early May. Vietnam's 5 percent broken rice rose to $400-$420 a tonne this week, free-on-board (FOB) Saigon, from $410 last week. "Prices are too high to trade now," said a trader in Ho Chi Minh City, adding that prices were expected to jump further on talk of more demand from Bangladesh.
Bangladesh is buying 200,000 tonnes of Vietnamese white rice at $430 a tonne and 50,000 tonnes of parboiled rice at $470 a tonne in a government-to-government deal - much higher rates than in previous tenders.
The country is also in talks with neighbouring India, the world's biggest rice exporter, whose 5 percent broken parboiled rice rose $2 per tonne to $424-$427. "Traders are speculating Bangladesh will increase imports due to the crop damage. It will help Indian exporters due to comparatively lower freight charges," said an exporter based in Kakinada in the southern state of Andhra Pradesh.
Bangladesh's state grains buyer on Wednesday issued its fourth international tender since May, looking to import another 50,000 tonnes of parboiled rice. However, Thai traders said demand from abroad has started to dwindle as high prices have forced buyers to turn to rivals. Thai benchmark 5 percent broken rice was quoted at $450-$460 a tonne, FOB Bangkok, up from $450-$457 last week.
"There are no buyers now. They've turned to buy from other countries because our prices are too high," a trader in Bangkok said. Thai rice prices have been rising steadily since March, when traders started loading ships, and touched levels unseen since August 2013 this month.
Prices have remained stable due to the appreciation of the baht against the US dollar and a lower supply ahead of an off-season harvest. "Prices have gone up a little because the baht has strengthened," another trader in Bangkok said.
Thailand and Vietnam are the world's second and third biggest rice exporters.
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