Thin demand drives Vietnams Jan-Nov rice exports down 25 percent

Oversupply on the global rice market has forced Vietnam to revise down its annual target twice this year.

Vietnam’s rice shipments in the January-November period fell 25 percent from a year ago to 4.54 million tons, according to new customs data.

Official statistics also show that rice exports, in terms of value, dropped 20.3 percent to $2 billion from the same period last year. The average price of Vietnamese rice in the first 10 months of the year went up 5.6 percent, to $450 per ton.

Industry experts attribute the downturn to thin demand and ample supply on the global market.

Vietnam has heavily relied on China as its biggest buyer for the staple grain. China’s purchases account for nearly 35 percent of Vietnam's exports.

Statistics showed that Vietnam’s shipments to China between January and November slumped 22.5 percent from a year earlier to an estimated 1.5 million tons.

Experts have warned that with local stockpiles currently estimated at 46.8 million tons, any import delay from China could send Vietnam's prices down.

Lower demand has also been seen in other key importing countries in Southeast Asia with January-November shipments to the Philippines down 61.6 percent, to Malaysia down 51.5 percent, and Singapore down 64.1 percent.

According to BMI Research, Asian rice prices will remain weak in early 2017 as production in importing nations has been recovering.

"Import demand will decline in 2017 as some of the largest traditional importers, including the Philippines and Indonesia, will see their domestic supply pick up in 2016/17," said a report released on November 18.

Competition on the global rice market will be more intense next year as the U.S. Department of Agriculture expects the global rice trade in 2017 to decrease by 2 percent from 41.3 million tons to 40.5 million.

The Food and Agriculture Organization of the United Nations also forecast that the global rice trade between 2015 and 2030 will just increase slightly by only 1.5 percent per year.

Global rice trade has significantly slowed so far this year, forcing Vietnam to revise down its full-year target twice.

Vietnam’s rice shipments could plummet by 27 percent in 2016 with annual volume, including sales across the border to top buyer China, projected to fall by about 2 million tons from last year’s 6.56 million tons.

The country is now aiming to ship just 4.75 million tons, the lowest since 2008.