Rice prices up in Thailand on China deal; slow in India, Vietnam

Farmers plant rice on a paddy in Vietnam's northern Phu Tho province, outside Hanoi, February 21, 2016.

Rice prices in Thailand advanced this week following a deal with the Chinese government, while markets slowed in India and Vietnam, traders said on Thursday.

In Thailand, the world's second biggest rice exporter, benchmark 5-percent broken rice RI-THBKN5-P1 edged up to $357-$360 a tonne, free-on-board (FOB) Bangkok, from $355-$360 last week.

"Prices went up on news of a government to government deal between Thailand and China," a trader in Bangkok said, adding there was no other demand from foreign buyers at the moment.

COFCO, China's state-owned food processing holding company, will buy 100,000 tonnes of Thai rice, local media reported on Monday.

A rising Thai baht against the dollar also contributed to higher prices, another trader said, adding this could lead to an increase in demand in the coming days.

"Some buyers might be afraid of prices going up higher," he said.

Thailand was able to export 1.6 million tonnes of rice this year up until Feb. 14, a 9.9 percent increase from the same period last year, according to data from the commerce ministry, with the exports worth 23.87 billion baht ($682.39 million).

Prices of 5-percent broken parboiled rice at top exporter India were steady this week at $376-$381 per tonne on thin demand.

"Demand has been falling due to higher prices. The gap between Indian and Thai prices is very big right now," said an exporter based out of Kakinada in the southern Indian state of Andhra Pradesh.

Along with exporters, government agencies are actively buying paddy for the public distribution system, pushing up prices above the minimum purchase price, exporters said.

The country's rice production in 2016/17 is likely to rise by 4.3 percent to a record high 108.86 million tonnes, the country's farm ministry said on Wednesday.

Vietnam's 5 percent broken rice RI-VNBKN5-P1 prices dropped to $345-$350 a tonne, FOB Saigon, from $352-$355 last week.

Traders were waiting for prices to fall further due to the harvest season later this month or early next month.

"Market won't be really vivid until mid-March when it enters harvest season and traders know more about the grain quality," said a Ho Chi Minh-based trader.

Rice exports in Vietnam, the world's third biggest exporter of the grain, declined 13.5 percent from a year earlier to 337,200 tonnes in January, customs data showed.