Vietnamese exporters will stockpile 1 million tons of milled summer-autumn rice for three months beginning July 15, a typical move to support domestic prices as the harvest in the Mekong Delta food basket peaks.
This time the stockpiles, equivalent to a quarter of the current crop output, would be built without government support in the form of low-interest loans or a guaranteed place in government export deals.
Last year, the country stockpiled 2 million tons in two phases, and earlier this year 65 exporters stockpiled a combined 1 million tons of winter-spring rice.
Fresh demand from the Middle East, Africa and Bangladesh lifted Asian rice prices last week but the increase may not last because supply is rising in the world's top two exporters, Thailand and Vietnam, traders said.
"We have not seen demand from African buyers while prices are static here," a trader at a foreign company in Ho Chi Minh City said.
Vietnam often exports summer-autumn grain, processed mainly into 15-percent broken and 25-percent broken grades, to the Philippines and African nations.
Foreign buyers have been waiting for prices in the world's second-largest rice exporter to ease when the summer-autumn crop harvest peaks from July, traders say.
Vietnam's 25 percent broken rice eased to $420-$430 a ton on Monday, free-on-board basis, from $425-$440 last week, while the higher quality 5-percent broken rice stood unchanged at $465 a ton due to thin buying demand.
No state support
Around 80 exporters would join the purchase until Aug. 30 to prevent prices from falling below 5,000 dong (24.3 U.S. cents) per kg during the peak of the harvest, a Vietnam Food Association official said, confirming a state-run media report.
"Businesses joining the scheme will have no support on interest rates, they will take the responsibility on their own," the official said by telephone from Ho Chi Minh City, Vietnam's largest rice trading market that lies next to the Mekong Delta.
In previous years, rice firms joining government-backed stockpiling programs could get interest-free loans to procure the grain. Vietnam stopped the subsidy this year as it stepped up the fight against inflation.
Exporters may feel reluctant to buy the grain given they have no state support.
"The policy from the association is only aimed at reminding farmers to avoid rushing to sell rice because companies will be buying soon," the trader added.
Farmers have so far harvested 94,000 hectares (232,300 acres), or nearly 6 percent of the 1.62 million hectares of the delta's summer-autumn crop, which has been projected to produce 8 million tons of paddy, the association said.
The price of summer-autumn paddy has eased around 5 percent in the past week to around 5,500 dong per kg as the harvest picks up steam.
The delta produced 24 million tons of paddy in 2010, or 60 percent of Vietnam's total, but supplied 90 percent of the country's exportable grain.
The summer-autumn crop is the second highest-yielding after the winter-spring season. But unlike grain from the other crop which mostly goes to exports, summer-autumn rice is used for both domestic consumption and exports due to lower quality.
Vietnam has revised up by a quarter its rice export forecast for this year to a record high of between 7.1 million and 7.4 million tons after a rise in shipments in the first quarter, the Agriculture Ministry said.
Last year it shipped a record 6.83 million tons of rice.
The country's rice exports totalled 3.39 million tons between Jan. 1 and June 9, up 18.5 percent from a year ago, the Vietnam Food Association reports showed.