Fresh buying demand, coupled with concerns about the impact of dry weather in Thailand and Vietnam, has kept Asian rice prices stable in the past week, traders said on Wednesday. Thailand and Vietnam, the world's second- and third-biggest rice exporters after India, have been facing a drought brought on by the El Nino weather pattern since late 2015.
Their combined export volume accounts for 40 percent of the global rice trade. "Small orders have arrived," said a Bangkok-based trader, whose frequent buyers include firms in Singapore, Malaysia, China, Hong Kong and countries in the Middle East and Africa.
"Our clients are running low on supply, so the usual ones come back," he said. Bids for Thai 5-percent broken rice rose to $371 a tonne, free-on-board (FOB) Bangkok, on Tuesday from $367 last Wednesday. Offers dropped slightly to $380 a tonne from $381. Thailand's markets are closed on Wednesday for a holiday.
Traders said the spread between bids and offers also narrowed because buyers have started stockpiling rice as the worst drought in more than 20 years has limited yields from Thai farmers. "News reports of Thailand's drought could possibly make an impact," he said. Global rice prices will eventually head higher due to the large crop damage inflicted on Southeast Asia's production in 2016, said a BMI Research report in late March.
In Vietnam, prices eased slightly as most buyers were absent, but purchases by China of white rice and fully broken rice has helped prevent prices from deep declines, traders said. Bids for 5-percent broken rice eased this week to $370 a tonne from $380 a week ago, FOB basis, while offers dropped to $380 from $385 last Wednesday. However, unpredictable Chinese purchase patterns are making it hard for Vietnamese exporters to work out long-term sale plans, traders said.
Africa, another major buyer of Vietnamese rice, has not returned as Vietnamese offer prices were still at par with those of Thai grain, said a trader at a foreign firm in Ho Chi Minh City. The Philippines brought new demand to the market. The country is planning to import 500,000 tonnes of rice to boost state reserve stocks, a grains agency official said on Tuesday.
"The demand could keep stable prices," another trader in Ho Chi Minh City said, noting that major government deals have been absent so far this year. Vietnam has exported an estimated 1.59 million tonnes of rice in the first quarter of 2016, up 41.6 percent from a year ago, the Agriculture Ministry said.