Vietnamese rice prices jumped nearly 5 percent in the past week as the country sealed a major deal with the Philippines, while Thailand, the biggest exporter, struggled to sell its swollen stocks. The price of Vietnam's 25 percent broken rice rose between 3 and 4.9 percent this week, before Vietnamese exporters start loading 500,000 tonnes for the Philippines from next month, traders said on Wednesday.
"Food companies have prepared stocks for the shipment so the price rise won't affect their loading but indicative prices have gone up anyway," a trader at a foreign firm in Ho Chi Minh City said. The Philippines is expecting delivery of 500,000 tonnes of Vietnamese rice in February and March, part of a bilateral deal involving at least 1 million tonnes of the grain, a source in the Philippines said on Tuesday.
Indicative prices of the 25 percent broken grain rose to $330-$335 a tonne, free-on-board basis, up from $320 last week before quotations were halted because the Vietnam Food Association imposed a floor of $370 per tonne for the variety.
Vietnam's 5-percent broken grade rose to $395 per tonne this week, free-on-board, from $390 last week, but was still below the association's floor of $400 a tonne. Thai benchmark 100 percent B grade white rice was steady at $580 baht per tonne on Wednesday as loading demand for African countries still provided support, exporters said. "Thai rice prices are expected to remain firm for a couple of weeks as African countries buy continuously," a Thai exporter said.
THAI STOCKS RELEASE: Thailand said on Wednesday it planned to release rice from its growing stocks to bring down storage costs and by selling them to through government-to-government deals.
"We need to release stocks as soon as possible in a bid to help reduce the government burden, and government deals are one of our options," Deputy Commerce Minister Alongkorn Pollabutr told Reuters. He mentioned Iran as one of the key buyers the government wanted to sell its stocks to.
Alongkorn said the government was estimated to hold up to 5 million tonnes of rice, which it has bought from farmers in intervention schemes since 2005 to shore up prices. That is double the figure of 2.5 million tonnes given by the Commerce Ministry in late 2008, before the latest intervention scheme started in November.
INDIAN BAN EASED: India, which vies with Vietnam as a second-biggest exporter, has scrapped its export tax on basmati rice and cut the floor price for overseas shipments to $1,100 per tonne, its trade minister, Kamal Nath, said on Tuesday.
The move was likely to have psychological impact on Asian rice prices, especially Thai 100 percent premium grade fragrant rice, an alternative variety for Indian basmati grade, traders said. "I think there would be some impact on Thai premium grade fragrant rice prices in the short term," said a Bangkok-based international trader. The price of Thai 100 percent premium grade fragrant rice was at $850 per tonne on Wednesday.