Rice export stagnant on slowing China purchase

02-Jun-2012 Intellasia | Saigon Times Daily | 7:01 AM Print This Post

Vietnam’s rice trade, having faced tough competition from India’s low-price commodity, has become stagnant now due to slowing demand from China, which has this year leapfrogged others to become Vietnam’s largest rice buyer.

Le Truong Son, general director of Docimexco Dong Thap, admitted his firm is having difficulties in rice export. Slowing demands in China have made Son’s company unable to deliver rice of many already-signed contracts to Chinese buyers on schedule.

Similarly, general director Nguyen Van Tien of An Giang Import Export Co. said the number of export contracts that his company has signed is quite large but the prices are low. His enterprise is even suffering higher costs to store rice due to failure to ship rice to China as scheduled, with one tonne charged with $5 a month, Tien stated.

According to the Ministry of Agriculture and Rural Development, the volume of rice export of the country in the year to date has reached an estimated three million tonnes worth $1.4 billion. The average export price stays at $470 a tonne.

Rice import markets have changed substantially this year, with China emerging as the biggest buyer of Vietnam, ousting the Philippines and Indonesia. The rice volume to be shipped to China has risen by 4.4 times in volume and some four times in value against the year-ago period.

Local rice exporters have been trying to seek new buyers. Africa, including Ivory Coast, Ghana and Senegal, has become a major market for low-grade rice of Vietnam.

The fact that India has lowered rice prices makes it more difficult for Vietnamese exporters to win the hearts of foreign buyers, Son of Docimexco noted.

Indian offers one tonne of 25 percent broken rice for export at around $360 on average, thus winning a major market share in Africa, which used to be a key consumer of Vietnam rice before.

Many Vietnamese traders have explored a new haven market in a few West African nations by shifting to the 5 percent broken rice category, but this higher-grade rice also faces tough competition from India that is priced at $10-20 lower than that of Vietnam for one tonne.

Furthermore, local exporters are now suffering a shortage of good input materials to produce high-quality rice for exports at home.

On Tuesday Thailand still maintained the price of 25 percent broken rice at $510-520 per tonne while Indian rice prices rose to $355-365 a tonne. However, Vietnamese rice prices slightly tumbled to $370-380 a tonne compared to the preceding day.


Category: Business

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