Rice exports from Vietnam, the world's second-biggest exporter, may drop 25 percent to 1.2 million metric tonnes in the first quarter as foreign buyers reduce orders on expectations that prices will decline.
"Falling commercial demand slowed our exports this quarter," said Truong Thanh Phong, chair of the HCM City-based Vietnam Food Association. "Foreign buyers expect that our prices will drop further but we expect orders will start to pick up from May."
Vietnam is trying to boost exports as production declines in other key producers so that it can reach an economic growth target of 6.5 percent this year, from 5.3 percent last year. The country last year shipped a record 6 million tonnes of rice, making the grain the sixth-biggest foreign exchange earner. It plans to ship a similar amount this year, Phong said.
"Demand for rice from buyer countries was low and they also wanted to wait and see what the output levels were in producing countries," said Nguyen Hieu Tam, head of rice research at Vietnam Market Analysis & Forecast Joint-Stock Co., a Hanoi-based research company for agricultural products. "Some African buyers also had financial difficulties in buying our rice," she said today.
Output in major producers including India and Indonesia may slow because of El Nino, Tam said by phone. The Philippines lost 298,852 tonnes or rice as of March 1 because of El Nino, the country's Department of Agriculture said. The weather phenomenon is caused by a warming of the equatorial Pacific Ocean and parches crops in Asia.
Bumper Harvest
Thailand's rough rice harvest may decline 15 percent in the year that began October 1 because of El Nino, the country's Office of Agricultural Economics said on January 13. Thailand is the world's biggest rice exporter.
Vietnam, meanwhile, produced a bumper winter-spring harvest, Tam said.
The Vietnam Food Association's Phong forecast in November that prices would surge 50 percent to about $800 a tonne by the end of the second quarter this year on increasing demand and unfavourable weather conditions. The country's average export price from January 1 to February 28 was $473 a tonne, according to the association's Web site.
Rice futures traded in Chicago have dropped 12 percent this year, compared with a 22 percent slump in the same period last year. The most-active contract gained 0.6 percent to $13.17 per 100 pounds at 5:35 p.m. in Singapore. The price climbed to a record $25.07 in April 2008.
Foreign Warehouses
The Vietnam Food Association is asking its 30 member companies to buy 1 million tonnes from farmers for stockpiling after prices dropped in the Mekong Delta, according to a report on the group's Web site. The Mekong Delta is Vietnam's main rice producing region.
More than 300,000 tonnes have been bought under this plan, Tuoi Tre newspaper reported today, citing Pham Van Bay, the group's vice chair.
The Southeast Asian nation also plans to start construction of a rice processing plant and warehouse in Cambodia by the end of the second quarter to support exports, according to Nguyen Tho Tri, deputy director of the Vietnam Southern Food Corp, which also has a stake in the project.
Another stockpiling warehouse will be built in the Philippines this year, he said, declining to give further details.
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