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News » Economic and Financial News
Higher Rice Prices At Home Deal Blow To Exporters 07/08/2013 17:00

The rice market is warming up with both domestic and export prices increasing, but the companies that have signed export contracts at lower prices earlier are sitting on fire.

Export offer prices of Vietnamese rice have risen by 3%, or US$10 per ton, over the past week, according to the rice market information website Oryza.com.

However, exporters stressed export rice prices were picking up at a slower pace than domestic prices, leading to potential losses from the contracts signed earlier when prices stayed low.

In the first seven months of the year, multiple rice export contracts were cancelled, said the Vietnam Food Association (VFA). A source told the Daily that the volume of rice signed in the cancelled contracts was nearly one million tons.

Penalties for contract cancellation are not as great as the losses exporters would incur if fulfilling their contracts. Therefore, rice exporters are willing to cancel export contracts and pay penalties, said a rice exporting firm.

Foreign institutions forecast Vietnamese rice prices would continue to increase. However, VFA noted rice supply was currently larger than demand in the global market, with India and Thailand likely to sell off their products, posing many challenges for Vietnamese rice export.

Lam Tuan Anh, director of Thinh Phat Food Company in Ben Tre, informed Thailand had sold more than 100,000 tons of rice whose quality equals the 5% broken rice of Vietnam at over US$440 per ton, making it hard for Vietnamese companies to export rice at US$410 per ton. Thus, the FOB price of the 5% broken rice on Monday fell to US$405 a ton.

Le Truong Son, general director of Docimexco in Dong Thap, said China, the largest rice buyer of Vietnam in the year to date, entered its harvest season this August, leading to a lower demand for rice imports. Rice exporters are awaiting the return to the rice market of traditional importers like Indonesia and the Philippines.

Domestic rice prices are improving, but farmers do not benefit since most of them have already sold out their rice.

Duong Van Men, a rice trader in Lap Vo District, Dong Thap Province, said the fresh paddy IR 50404 now sold for VND4,550-4,600 per kilo while the long-grain types were priced at VND4,850-4,950 a kilo, an increase of VND100 per kilo from the previous week.

(Source: thesaigontimes.vn)

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