Vietnam, the world's second-biggest exporter of rice, cut grain prices amid rising supply during the harvest season as it jostles for market share with India, while traders said prices could fall further as swelling supplies heat up competition. The Vietnam Food Association, which oversees rice exports, cut the export floor price for the 25 percent broken grain to $420 a tonne from $455 a tonne on Wednesday.
"They could be waiting for the harvest of the winter-spring crop when they expect prices to fall further," a trader in Ho Chi Minh City said.
The Vietnamese floor price was well below the Indian white rice grade, which was quoted unchanged at $455-$465 per tonne, on a free-on-board basis (FOB), traders said.
Vietnam-based traders said the market was still quiet, with few buyers who were just investigating prices, despite the recent decreases.
"Buyers may wait to buy when prices reach the bottom as they realised that supply was rising. And if India wanted to export, it could cut its prices to compete. We may see Indian prices of around $400 a tonne," said Kiattisak Kalayasirivat of Novel Agritrade.
Vietnam is about to harvest its winter-spring crop, which is expected to produce 11 million tonnes of paddy. Production is expected to peak in March.
The Vietnam Food Association said it would ask exporters to buy rice for stockpiling if domestic prices fall below 5,000 dong (24 US cents) a kg, but it has not clarified the scale of the plan. Prices now stand at 5,600-5,900 dong per kg.
The Indian government panel on Tuesday reviewed the rice export scenario and decided to continue with the free export policy on common rice.
The panel also lowered the floor export price on aromatic Basmati rice by $200, to $700 per tonne. "There has been lukewarm response from overseas buyers as supplies from Vietnam have become cheaper than Indian white rice by at least $20 per tonne," said a Delhi-based trader.
Traders said competition between Vietnam and India was expected to intensify as India was likely to move to grab more market share at a time it is holding huge stocks.
India's January 1 rice inventory in government warehouses was 29.8 million tonnes, more than 2.5 times its target of 11.8 million tonnes.
Its rice production is estimated at 102.75 million tonnes, compared with 95.98 million produced a year earlier, the latest farm ministry data showed. Basmati makes up around 5 percent of India's total rice production.
THAI PRICES HELD HIGH, EXPORT SLUMP Although demand was very thin, Thai rice prices were held steady at firm levels by the government intervention.
The government said it planned to continue to pay farmers 15,000 baht ($480) per tonne until the end of July as a support measure.
The scheme pegged the export price for the benchmark 100 percent B grade white rice to stay at $550 a tonne, unchanged from last week.
"Exports will definitely fall further as our prices are uncompetitive," Kiattisak said.
Thailand, the world's biggest rice exporter, sold just 350,000 tonnes of rice in January, down 52 percent from a year earlier, when it exported 730,000 tonnes, Commerce Ministry data show.