Why has Vietnams rice export price soared to nearly 500 USD/tonne?

In the first 11 months of 2020, rice exports reached 5.74 million tonnes, worth US$2.85 billion. In particular, the price of 5% broken rice in Vietnam in November reached nearly 500 USD/tonne.

According to the Agro Processing and Market Development Authority (Ministry of Agriculture and Rural Development), from the beginning of the year to the end of November, the total rice export weight and value reached 5.74 million tonnes, respectively and US$2.85 billion, down 2.2% in weight but up 10.4% in value fromthe same period in 2019.

In the first 10 months of 2020, the Philippines ranked first in Vietnam's rice export market with 32.9% market share. The markets with a sharp increase in rice export value included Indonesia, up 3.1 times andChina, up 79.2%. In contrast, the market with the strongest drop in rice export value in the first 10 months of 2020 was Iraq at down 65.6%.

The average rice export price in the first 10 months of 2020 reached 493.3 USD/tonne, up 12.7% fromthe same period in 2019.

Notably, in nearly a month, the price of 5% broken rice in Vietnam increased slightly from about 495 USD/tonne at the beginning of the month to about 498 USD / tonne at the end of the month. Meanwhile, Thailand's 5% broken rice price jumped from 466 USD/tonne at the beginning of the month to 480 USD/tonne at the end of the month.

The main reason pointed out by the Agro Processing and Market Development Authority is the supply from the new crop is slow to bring to the market, causing scarcity andreducingprices.

Contrary to theseprice increases of Vietnamese and Thai rice, Indian rice prices recorded a slight decrease from US$ 373/tonne at the beginning of the month to US$ 368/tonne at the end of the month. The main reason is the rupee has a bearish trend.

Some experts said that the Vietnam-EU Free Trade Agreement (EVFTA) taking effect from August 1, 2020 is one of the new driversfor rice export price growth.

Due to the EVFTA, the EU gives Vietnam a quota of 80,000 tonnes of rice/year (including 30,000 tonnes of milled rice, 20,000 tonnes of unmilled rice and 30,000 tonnes of fragrant rice). For rice products, the EU will bring the tax rate to 0% after 3-5 years.

Minister of Agriculture and Rural Development Nguyen XuanCuongsaid the EVFTA is "key" for Vietnam's agricultural exports to reach a potential market with more than 511 million people andGDP per capita is US$35,000.

The Ministry of Agriculture and Rural Development said the export of rice, including fragrant rice to the EU from now until the end of the year, will continue to increase, even though it is still affected by the Covid-19 pandemic.

By 2020, the area of ​​rice cultivation will be 7,364 thousand hectares with expected output of 43.5 million tonnes of paddy.

Domestic demand for paddy is 30 million tonnes of paddy. In which, people's consumption is 14.3 million tonnes of paddy; for processing is 7.5 million tonnes of paddy; for husbandry 3.4 million tonnes of paddy; used as seed, reserve seed is 1.0 million tonnes of paddy; the domestic reserve is 3.8 million tonnes of paddy.

Leaders of the Agro Processing and Market Development Authority expect that in December and beyond, rice prices will stabiliseagain, as the supply from the autumn-winter crop is gradually decreasing and the supply from winter-spring rice will begin first 1-2 months.

For exports, the Ministry of Agriculture and Rural Development forecasts the output of rice for export in 2020 will be 6.5 - 6.7 million tonnes (equivalent to 13 - 13.5 million tonnes of paddy).

In the domestic market, the prices of rice in the Mekong Delta provinces increased and decreased in contrast in November, but in general, the price increased slightly compared to October.

Specifically, in AnGiang, IR50404 rice increased by 200 VND / kg to 6,200 VND / kg; OM 2514 rice increased by 400 VND / kg to 6,300 VND / kg; rice is usually at 10,500 VND / kg; jasmine specialty fragrant rice at 14,500 VND / kg.

In KienGiang, the price of rice decreased due to inundation by storms, with IR50404 rice down 200 VND / kg to 6,600 - 6,800 VND / kg; OM 6976 rice was at 6,900 - 7,200 VND / kg; OM 5451 rice decreased by 200 VND / kg to 7,000 - 7,100 VND / kg.

In Vinh Long, IR50404 rice in VungLiem district was recorded at a high level, 6,000 VND / kg of fresh rice and 6,800 VND / kg of dry rice; fresh long grain paddy is 6,300 VND / kg, dry rice is 6,900 VND / kg.