VietNamNet Bridge – Local rice exporters all expect the country’s rice exports to encounter more difficulties in the near future as Thailand is making a move to unleash its huge inventory.

Thailand has sharply reduced the price of 100B rice category – equivalent to Vietnam’s 5%-broken rice type - to US$380 a ton from the previous US$430 in a bid to cut its rice inventory, according to the Vietnam Food Association (VFA).

Tran Thanh Van, deputy director of Can Tho-based Gentranco Joint Stock Company, said that he was really stunned at the information. Van noticed many customers buying rice for export to China, Africa and some Asian nations had halted trading in recent days to watch new market movements.

The fact that Thailand has slashed its rice price to the equivalent of Vietnam’s rice price is a big disadvantage for local firms as foreign customers will shift to buying Thai rice then, he noted.

Le Truong Son, general director of Docimexco Joint Stock Company in the Mekong Delta province of Dong Thap, predicted that Vietnamese exporters would hardly compete with Thai firms under such a scenario. That is because the quality of Thai rice in stock is still very high, he explained.

The price of Vietnamese 5% broken rice exported to China now hovers around US$395 a ton while rice shipped to African nations through intermediaries range between US$380 and US$385 a ton, which have fallen a bit compared to early last month.

Exporters reported lower demand from Chinese customers at this time owing to the current harvest season in the neighboring country.

According to rice expert Nguyen Dinh Bich, price differences in the past had helped rice exporting countries have their own major markets. For example, Chinese customers preferred Vietnamese rice to Thai rice while Indian rice was more favored by African markets thanks to low transport fees, he said.

However, he noted, the global rice market over the past few months has seen the price gap narrow down, as Vietnam’s export rice price in the middle of last month increased while those of Thailand, India and Pakistan as major suppliers fell.

“The pricing convergent point” as referred to by Bich, is believed to cause many difficulties for Vietnam’s rice exporters who have so far relied on low prices to compete with other sellers on the global market.

VFA last week proposed the Government extend the interest rate subsidy program by one more month to the middle of next month to prevent local enterprises from rushing to sell rice when their loans fall due. As per the decision on purchasing one million tons of rice of the summer-autumn crop for stockpiling, the Government supports local companies with three-month lending rate with the loans being due in the middle of this month.

The association also asked permission from the Government to purchase an extra 300,000 tons of rice of the summer-autumn and autumn-winter crops for temporary stockpiling so as to stabilize domestic paddy prices.

Source: SGT