Low stocks and fresh demand from Indonesia is supporting rice prices in Vietnam, the world's second-largest exporter, traders said on Wednesday. They said stocks had been thinning as exporters rushed to load shipments for the Philippines during the past two months.
Vietnam has agreed to sell 1.75 million tonnes of rice to the Philippines this year, or nearly 39 percent of the total amount it has secured for export so far this year.
Most of the volume was contracted for delivery in August and September.
"Indonesia's plan to import rice is really moving the market here," said a trader in trade hub Ho Chi Minh City.
Indonesia this week revised upwards the volume of rice import permits to be issued to state logistics agency Bulog in October to 250,000 tonnes, to ensure sufficient national stocks.
A Bulog official said on Wednesday the agency was considering buying the rice through government-to-government deals with neighbouring countries including Vietnam and Thailand.
Bulog said open tender could also be an option. "Vietnamese exporters are really keen to win some of that volume," said another trader in Ho Chi Minh City.
Traders said the Indonesian import plan lifted export prices for the 5-percent broken rice to between $255 and $257 a tonne, free on board, Saigon Port, from around $250 a week.
They also quoted the 15-percent broken grade at $245 to $247 a tonne, higher than last week's price of $243 a tonne.
The Vietnam Food Association said Vietnam's rice exports would reach a record 4.5 million tonne in 2005, up 10.8 percent from 2004, including 600,000 tonnes to be loaded between September and December.
Vietnam, second only to Thailand as a rice exporter, shipped 3.82 million tonnes in the first eight months of 2005, up 22.5 percent from the same year-ago period, government data showed.
Traders said the floods in the Mekong Delta region did not affect rice production, as the key summer-autumn crop the second-highest yielding crop after winter-spring had been harvested before the waters arrived.
The annual floodwaters from Cambodia bring fertile soil and wash pests and insects off the rice fields in the southern delta, which produces around half of Vietnam's grain.
Meanwhile, torrential rains spawned by a low-pressure system hit the country's central belt this week but caused only minor damages to paddy crops there, state media reported on Wednesday.
This week, 11 vessels were loading 106,050 tonnes of mostly 25-percent broken rice grade for the Philippines, Malaysia, Cuba, Iran and Africa.
Another 12 vessels have completed loading 147,900 tonnes of mostly 5-percent broken rice grade for Africa, Malaysia, Iran and the Philippines.