Vietnam has raised the minimum price for a rice export grade often bought by the Philippines, its top buyer, following the extension of a government-to-government pact covering supply of the grain. In December the Philippines extended to 2013 an agreement with Vietnam to secure rice supplies in emergency situations. Manila said it would decide on its 2011 import plans by the end of this month.
As of Monday, the Vietnam Food Association (VNA) raised the floor for the 25 percent broken rice, Vietnam's most common export grade, to $495 a tonne from $490 in place since December 27. The new floor, applied to shipments in January and February, means the grade had risen 6.5 percent over the past year.
The association left the floor for 5 percent broken rice unchanged at $520 a tonne, free on board Saigon Port. "The move has created a new price level in preparation for negotiations with the Philippines," said a Vietnamese trader with a foreign company in Ho Chi Minh City, adding it had not had any impact yet on market transactions this week.
Operators were trying to work out the likely demand from the Philippines this year, which could have impact on Asian rice prices, he said. The Philippines, the world's biggest rice buyer, imported a record of 2.45 million tonnes of rice in 2010, most of it from Vietnam, the second-largest exporter of the grain after Thailand.
Last Tuesday, the food association said demand from the Philippines could reach 1.5 million tonnes this year, and Vietnam hoped to secure contracts for 1 million. Vietnam could have 6.6 million tonnes of rice available for export this year, so shipments could be higher than an initial estimate of 6.0 million, a state-run newspaper reported last week. The trade ministry has forecast that revenue from rice, Vietnam's biggest agricultural export, could drop to $3 billion in 2011 from $3.2 billion last year, when Vietnam exported a record of 6.83 million tonnes of the grain.