VietNamNet Bridge - Vietnam may be put at a disadvantage when Thailand sells 13 million tons of rice from its stockpile. 

 

Vietnam may be put at a disadvantage when Thailand sells 13 million tons of rice from its stockpile.

The government of Thailand recently announced a plan to clear 13 million tons of rice being kept at national storehouses by 2017.

In the immediate time, the country will sell 2 million tons of rice through government-to-government (G2G) contracts signed with China, the Philippines and Indonesia.

The government of Thailand, anticipating increasing demand for the upcoming Lunar New Year, has been trying to negotiate rice exports to Asian countries through many different channels.

Sources have reported that Thailand has signed a 33.4 billion baht ($929 million) contract with the Chinese government. 

Meanwhile, the Philippines have shown intention to import 300,000-400,000 tons of rice more to offset a short supply caused by prolonged natural disasters.

“Even if Thailand tries to export inventory rice to Vietnam’s loyal markets such as China, Indonesia and the Philippines, Vietnam’s rice will not be dislodged from the markets,” Huynh The Nang, chair of the Vietnam Food Association

Huynh The Nang, chair of the Vietnam Food Association (VFA), said in the Vietnam News Agency that the sale of Thai rice would force the market price down, thus badly affecting Vietnam’s exports.

However, Nang still keeps optimistic, believing that there are many favorable conditions for Vietnam to export rice in 2016.

Thai rice output in 2016 is forecast to drop to the 5-year deepest low to 16.4 million tons due to the El Nino effects.

Though Thailand has 13 million tons of rice in stocks which it plans to sell out, the country’s export volume in 2016 is believed not to exceed 9 million tons, the same export volume as 2015.

“Even if Thailand tries to export inventory rice to Vietnam’s loyal markets such as China, Indonesia and the Philippines, Vietnam’s rice will not be dislodged from the markets,” Nang said.

“This is because Thailand only has a modest volume of white rice. These markets mostly consume white rice,” he explained.

Meanwhile, Huynh Van Thon, president of Loc Troi Group, warned that the attempt by Thailand to push up exports to Vietnam’s loyal markets would affect negotiations for prices.

However, Thon also thinks that the markets will not import 100 percent of old rice, but they will also need new rice, so there would be still room for Vietnamese exporters.

“Vietnamese mostly sell new rice harvested from recent crops, and therefore, they can sell rice at prices higher than old Thai inventory rice,” he said.

In 2013, Vietnam suffered when Thailand cleared its stocks and slashed the selling prices.

In September 2013, most rice importers suspended transactions and kept a wait-and-see attitude, while others tried to force Vietnamese exporters to slash their selling prices or threatened to break contracts.

Vietnamese exporters then, under pressure, had to ease the export price to $340-360 per ton, which was even lower than the production cost of $380-390 per ton.

Dat Viet