Vietnam's paddy prices have fallen nearly five percent in the past week on the back of weak export demand and abundant supplies in the top rice-growing provinces of the Mekong river delta, traders said on Wednesday.
Vietnam projects rice exports this year of 4.5 million to 4.6 million tonnes, putting it on track to be the world's second-largest rice exporter, up from third place in 2007, after Thailand and India, when it shipped 4.5 million tonnes.
However traders expected prices to stay stable at current levels as some exporters were in talks with foreign buyers for shipment to Africa and the Middle East this week. "Vietnamese rice is now about $100 per tonne cheaper than Thai rice of the same grade, and that's a big advantage to lure buyers from Africa," a trader in Ho Chi Minh City said.
The 5-percent broken rice was now being offered at about $500 to $540 a tonne, free-on-board basis, compared to more than $600 to $700 a tonne in neighbouring Thailand, he said. On Wednesday, the median price of benchmark 100 percent B grade white rice quoted by Bangkok exporters was steady at $735 per tonne, well below the record high of $1,080 per tonne in April.
Another trader said state-run rice firm Vinafood 1 was handling two contracts for October shipment, one of 40,000 tonnes of top quality 5-percent broken rice to Iran and another of 20,000 tonnes to Iraq. Traders said the Vietnam Food Association had cut minimum export prices for 5-percent broken rice to $540 a tonne from $600 set earlier this month, as it moved to beef up sales to help farmers who hold high stocks from a bumper harvest in the Mekong Delta.
The association said this week domestic dried paddy prices fell nearly 5 percent from last week to around 4,400 dong (26 US cents) per kg while 5-percent broken rice was offered at 6,900 dong per kg, down nearly 1,000 dong from a week ago.
"Prices are falling because of poor quality, because non-stop rains in the past month prevented farmers from drying the grain," the association said in a weekly report. Vietnam's rice exports in the first eight months of this year fell 4.8 percent to 3.38 million tonnes, but revenues have surged 96 percent to $2.24 billion on high world prices, government statistics show. This week, four vessels were loading a combined 45,050 tonnes of rice for the Philippines and Africa at Saigon Port, and five more had left with 27,750 tonnes of the grain for the Philippines, industry reports show.