Demand from China, Africa supports Vietnamese rice prices at harvest end

Vietnamese rice is being offered at around $35-$40 a ton below Thai grain.

China and several African countries have returned to Vietnam seeking fragrant and white rice, and the demand has helped stabilize export prices even though supply has risen at the end of a major harvest, traders said on Friday.

They also said Vietnamese rice being offered for cheaper prices than Thai and Indian rice has also attracted buyers, mostly from Africa. Vietnam is the world's third-largest rice exporter, behind India and Thailand.

Farmers in the Mekong Delta, Vietnam's food basket, have finished harvesting the winter-spring crop, the biggest of the country's three annual crops. Paddy output eased 2 percent from last year to an estimated 9.8 million tons, based on government statistics. Most of the grain from this crop is being exported.

Reuters cited Vietnamese traders' quotations for five percent broken rice showing prices rose this week to $355-$360 a ton, free on board (FOB) basis, on more active trade.

At $360 a ton, the price is at its highest since August 31, 2016.

But traders at foreign firms and a dealer at a state-run export company in Ho Chi Minh City told VnExpress International that exporters are looking to sell the grade at around $355 a ton, while bids stood at $350-$352 a ton, similar to last week.

"Rice exports to China are going well," the dealer said. "Africa is also coming back with inquiries for the 5-percent and the 15 percent broken varieties, as well as fragrant rice."

He added that ample supplies are now available to state-owned export firms that have better access to bank loans, while private exporters are struggling to build stock due to weaker finances.

Vietnamese prices are below those offered by Thailand, where the 5-percent broken rice rose this week to $387-$392 a ton, FOB basis, from $380-$390 last week and $360-$375 at the end of April due to loading demand during a slow off-season harvest, Reuters cited Thai traders in Bangkok as saying.

Traders noted China, the biggest buyer of Vietnamese rice, has been taking more of the grain in the past month.

China imported 288,000 tons of rice from Vietnam in April, way above the monthly average of 176,000 tons in the first quarter, Vietnam Customs data showed.

That brought Vietnam's total export volume to China in the January-April period to 815,000 tons, a rise of 16 percent from a year ago, based on data from the Finance Ministry-run customs agency.

Earlier this year, China approved 22 Vietnamese rice export firms as official suppliers, but is also trying to limit rice purchases across the land border with Vietnam.

China is projected to import 5 million tons of rice this year, up 8.7 percent from 2016, the U.S. Department of Agriculture said.

Vietnam is forecast to export 5.6 million tons in 2017, up 10 percent from last year, the USDA said in a report on Wednesday. 

The USDA also forecasts both India and Thailand will export around double that amount this year.