Rice exporters expect bumper price harvest

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Vietnamese traders believe they stand a good chance of getting high prices for rice this year as world supply shrinks amidst rising demand.

Private firms from the Philippines, the world's largest rice buyer, are seeking to buy up to 660,000 tons of Vietnamese rice, while Bangladesh is interested in buying 800,000 tons of rice from Vietnam in the coming months, the Vietnam Economic Times newspaper reported Tuesday.

According to the Ministry of Industry and Trade, Indonesia bought 400,000 tons of 15 percent broken rice from Vietnamese traders in the last half of February.

Around the world, policy makers are boosting stockpiles and agricultural production as they try to deal with growing demand for food and tight commodity supplies, following droughts and storms in leading agriculture producers like Russia, Australia and China.

Truong Thanh Phong, chairman of the Vietnam Food Association, said as more orders will come from Cuba,

Iraq and Malaysia, local rice traders are set to have a very good year.

Food prices are surging around the world, and rice prices in particular will not fall, Phong said.

As Vietnamese rice prices are competitive, it will be easy to attract buyers, he said, warning traders from rushing into signing contracts offering very low prices. They should wait until the end of March, he added.

The association has just raised the minimum price for 25 percent broken rice by 2 percent to US$490 a ton. It has also raised the floor for the higher quality 5 percent broken rice by 4 percent to $520 a ton, FOB (free on board).

Analysts said the devaluation of the dong against the dollar last month has helped the country attract more rice buyers. Thai rice is now at a disadvantage when compared with Vietnamese rice in terms of prices, they said.

The price of Thai rice, the benchmark for Asia, has been forecast to climb 13 percent this year to $600 a ton due to rising demand. The Philippines will open bids to import at least 1.5 million tons in the second and third quarters, while Indonesia and Bangladesh will continue importing rice to bolster inventories and strengthen food security, Bloomberg cited Thailand's Foreign Trade Department as saying.

The Philippines, Vietnam's biggest rice importer, has not signed any contracts with Vietnam so far this year.

Vietnamese traders said the Philippines' government wants to purchase the grain via the private sector first to keep prices at a low level before it starts signing government-to-government deals to purchase in bulk. They said private companies from the Philippines, knowing that Vietnam is now at the peak of its largest crop of the year the winter-spring crop, have tried to force prices down by creating competition among Vietnamese sellers.

Vietnamese rice companies have begun buying winter-spring grain under a stockpiling plan to prevent price falls. Under the plan, 65 rice exporters will buy a combined two million tons of paddy, equivalent to one million tons of milled rice, by April 15.

Vietnam, the second largest rice exporter after Thailand, may produce about 25 million tons of milled rice this year, amply sufficient to allow exports of between six million and 6.5 million tons this year.

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