Asia Rice-Drought-hit Thailands rates soar to 6-1/2 yr peak on supply dearth

A supply crunch in drought stricken Thailand pushed rice export prices to their highest in 6-1/2 years this week, while Vietnamese rates bounced back to a more than one-year high on firm demand.

An ethnic Thai farmer works on her terraced rice field in Pu Luong, Vietnam February 29, 2020. Photo: Reuters

Thailand’s benchmark five percent broken rice prices jumped to US$460-467 per metric ton on Thursday, their highest since August 2013, from $430-452 last week.

“Most of the demand is from domestic buyers who are stocking up rice amid fears of shortages,” a Bangkok-based trader said.

The protracted drought in many rice producing areas caused market concerns over possible supply shortages and is the main reason for the price hike as overseas demand remained flat, traders said.

The dry season, which usually starts in November and lasts until April, could persist into June, the Thai government said.

In Vietnam, rates for five-percent broken rice rose to $390-400 on Thursday, their highest since December 2018, versus $365-375 a week earlier on strong demand.

“The Philippines remains the largest buyer, and we have seen more orders coming in from Malaysia, Cuba and Africa,” a trader based in Ho Chi Minh City said.

Vietnam’s rice exports in the first two months of this year likely rose 11.5 percent from a year earlier to 811,000 tonnes, the government’s General Statistics Office said on Saturday.

“The strong demand has outpaced the rise in supplies as local farmers are still harvesting rice from the winter-spring crop,” another trader in the city said, adding that farmers have harvested 60-70 percent of the crop.

Meanwhile, in top exporter India, rice export prices extended losses due to weak demand and as rupee fell to the lowest level in 16 months.

India’s five percent broken parboiled variety rates inched lower to $367-371 per tonne this week, from last week’s $369-373.

“Weak rupee is allowing us to lower prices in dollar terms, but still demand is not picking up,” said an exporter based at Kakinada in the southern state of Andhra Pradesh.

Weak rupee increases exporters margin from the overseas sale.

Neighboring Bangladesh has set a production target of 20 million metric tons for summer variety rice crop “Boro”, for the current year, a senior agriculture ministry official said.

Boro contributes more than half of Bangladesh’s typical annual rice output of around 35 million metric tons.

In 2019, the country produced a record 20.4 million metric tons of Boro, up from 19.6 million metric tons the previous year, the agriculture ministry says.