Major rice producers in Asia could get a fresh demand boost as flood-hit Bangladesh continues recent buying to shore up depleted stocks of the staple, while Thailand looks to cash in on reduced output from top exporter India. Bangladesh is looking to buy more rice in inter-government deals to ensure adequate stocks, a food ministry official said.
The state grains buyer plans to issue more international tenders while it is still assessing average prices and other details for a domestic tender to buy 200,000 tonnes of parboiled rice, which closed on Tuesday. "We are in talks to buy more rice from Vietnam," the official said, adding the government was "desperately trying to seal a deal with Thailand."
Thailand's benchmark 5-percent broken rice rose to $385-$390 a tonne, free-on-board (FOB) Bangkok, from the $375-$385 range last week, amid prospects of an uptick in demand and a possible deal with Iraq. "There has been talk of Iraq buying Thai rice for a long time. However, there hasn't been any agreement as yet," a trader in Bangkok said. Iraq is looking to import 30,000 tonnes of any origin.
Traders in Thailand were also optimistic that expectations of lower exports from India this season would translate into fresh demand for Thai rice. "We do not expect India to import any rice despite the expected fall in output. However, they may export less. This is likely to create more demand from other rice producing countries such as Thailand," said another Bangkok-based trader.
India's rice production from summer-sown crop is likely to fall 2 percent to 94.48 million tonnes during the 2017-18 period with production expected to take a hit from lower-than-average rainfall. India's 5 percent broken parboiled rice prices fell by $3 per tonne to the $402-$405 level this week due to weak demand.
"Indian rice is not competitive due to higher prices. Supplies from Thailand, Vietnam are much cheaper than India," said an exporter based in Kakinada in the southern state of Andhra Pradesh. In Vietnam, 5-percent broken rice narrowed slightly to $385-390 a tonne, FOB Saigon, from $385-$395 last week, with the high price levels likely to prevail as the market cools toward the end of the year, traders said.
"It's hard for prices to go down further, although some traders hope for lower, more competitive prices. This is because autumn-winter crop output declined, which affected supply," a trader in Ho Chi Minh city said.