Rice exports from Vietnam, the world's second-biggest exporter, may drop 25
percent to 1.2 million tons in the first quarter as foreign buyers reduce orders
on expectations that prices will decline.
"Falling commercial demand slowed our exports this quarter," said Truong Thanh
Phong, chairman of the Ho Chi Minh City-based Vietnam Food Association. "Foreign
buyers expect that our prices will drop further but we expect orders will start
to pick up from May."
Vietnam is trying to boost exports as production declines in other key producers
so that it can reach an economic growth target of 6.5 percent this year, from
5.3 percent last year. The country last year shipped a record 6 million tons of
rice, making the grain the sixth-biggest foreign exchange earner. It plans to
ship a similar amount this year, Phong said.
"Demand for rice from buyer countries was low and they also wanted to wait and
see what the output levels were in producing countries," said Nguyen Hieu Tam,
head of rice research at Vietnam Market Analysis & Forecast Joint-Stock Co., a
Hanoi-based research company for agricultural products. "Some African buyers
also had financial difficulties in buying our rice," she said Tuesday.
Output in major producers including India and Indonesia may slow because of El
Nino, Tam said by phone. The Philippines lost 298,852 tons or rice as of March 1
because of El Nino, the country's Department of Agriculture said. The weather
phenomenon is caused by a warming of the equatorial Pacific Ocean and parches
crops in Asia.
Thailand's rough rice harvest may decline 15 percent in the year that began Oct.
1 because of El Nino, the country's Office of Agricultural Economics said on
Jan. 13. Thailand is the world's biggest rice exporter.
Vietnam, meanwhile, produced a bumper winter-spring harvest, Tam said.
Vietnam Food Association's Phong forecast in November that prices would surge 50
percent to about $800 a ton by the end of the second quarter this year on
increasing demand and unfavorable weather conditions. The country's average
export price from Jan. 1 to Feb. 28 was $473 a ton, according to the
association's Web site.
Rice futures traded in Chicago have dropped 12 percent this year, compared with
a 22 percent slump in the same period last year. The most-active contract gained
0.6 percent to $13.17 per 100 pounds at 5:35 p.m. in Singapore. The price
climbed to a record $25.07 in April 2008.
Vietnam Food Association is asking its 30 member companies to buy 1 million tons
from farmers for stockpiling after prices dropped in the Mekong Delta, according
to a report on the group's Web site. The Mekong Delta is Vietnam's main rice
More than 300,000 tons have been bought under this plan, Tuoi Tre newspaper
reported Tuesday, citing Pham Van Bay, the group's vice chairman.
Southeast Asian nation also plans to start construction of a rice processing
plant and warehouse in Cambodia by the end of the second quarter to support
exports, according to Nguyen Tho Tri, deputy director of the Vietnam Southern
Food Corp, which also has a stake in the project.
Another stockpiling warehouse will be built in the Philippines this year, he
said, declining to give further details.