VN rice exporters jittery after Thailand's price cut

Thailand’s decision to sharply reduce the price of 100B rice, which is equivalent to Vietnam’s 5 per cent broken rice, from US$430 (Bt13,800) per tonne to $380 to pare its inventory has affected global prices, including in Vietnam, according to the Vietnam Food Association (VFA).

Prices of OM 0676 paddy in the Mekong Delta dropped from 5,000 (Bt7.5) to 5,100 Vietnamese dong per kilo in late August to 4,500-4,600 Vietnamese dong on September 3. 

The prices of IR50404 paddy fell from 4,700-4,800 Vietnamese dong to 4,200-4,300 Vietnamese dong per kilo in the same period.

Rice exporters said they would face a bigger challenge in the near future as Thailand is planning to unleash its huge inventory of 17 million tonnes on the world.

Tran Thanh Van, deputy director of the Can Tho-based Gentranco Co, said many customers who buy rice for exporting to China, Africa, and some Asian nations have recently stopped buying and are watching the market’s movements.

Thailand’s decision to cut the price is a blow for Vietnamese firms as foreign customers are likely to prefer Thai rice, he said.

Le Truong Son, general director of the Dong Thap-based Docimexco JSC, told Thoi Bao Kinh Te Sai Gon (the Sai gon Economic Times) that Vietnamese exporters cannot compete with their Thai rivals because of the difference in quality.

Vietnam is exporting 5 per cent broken rice to China for around $395 per tonne and to African nations for $380 to $385, slightly lower compared to early last month.

Exporters reported lower demand from Chinese customers as it is harvest season now in that country.

To help rice exporters overcome their difficulties, the VFA has urged the government to extend its interest subsidy programme by one month to mid-October to prevent food companies from rushing to sell the grain when their loans fall due. 

Following its decision to stockpile 1 million tonnes of rice from the summer-autumn crop, the government provided the companies with three-month loans that fall due in the middle of this month, VFA chairman Truong Thanh Phong said.

The association also sought permission from the government to buy another 300,000 tonnes of rice from the summer-autumn and autumn-winter crops to stabilise domestic prices. The VFA has also called on rice exporters to explore new markets, he said. It has urged the government to negotiate with Angola and Kenya on selling rice so that exporters can begin procedures for shipments, Phong added.