Rice export prices drop sharply

Vietnam's rice export prices have dropped by $15 in the past two days as Philippine businesses have canceled and delayed imports following the country's rice price ceiling order.

Data from the Vietnam Food Association (VFA) shows that from September 6-7, export rice prices have continuously decreased sharply. Accordingly, Vietnam's 5% broken rice has decreased by 15 USD per ton compared to the session on September 5 to 628 USD; 25% broken rice has also decreased by 15 USD to 613 USD per ton. These are the two sharpest consecutive decreases since India banned rice exports.

In the world market, Thailand's 5% broken rice also decreased by 15 USD to 618 USD per ton, 25% broken rice decreased by 12 USD to 563 USD per ton compared to September 5.

The decline in rice export prices is believed to have been affected by the ceiling order from the Philippines, Vietnam’s largest rice consumer. In the first seven months of this year, Vietnam exported nearly 1.94 million tons of rice to this country, accounting for nearly 40% of Vietnam’s total rice exports.

On August 31, Philippine President Ferdinand Marcos Jr. set a price ceiling of 41 pesos ($0.72) per kilogram for regular-milled rice and 45 pesos ($0.79) per kilogram for well-milled rice, equivalent to $720-800 per ton. The imposition was due to rapid increases in domestic retail prices and speculation.

Mr. Nguyen Viet Anh, General Director of Phuong Dong Food Company Limited (ORICO) - a rice exporter in the top 10 - said that after the above information, the company had some import partners from the Philippines cancel their ships, while others extended their contracts while waiting for a new decision from this country.

Similarly, the director of a large rice exporting company in An Giang said that since the beginning of September (one day after the Philippines' price ceiling order appeared), 40% of importers in this country have asked to cancel their rice purchase contracts from his company. Because these importers said the more they sell, the more they will lose. Currently, the price of rice purchased at Vietnam's warehouse is about 640-670 USD per ton, if transportation costs are added, the price is up to 900 USD per ton. Meanwhile, the Philippines has set a price ceiling of about 738-810 USD per ton, lower than the import price.

"Philippine partners said that if the rice price contracts are above 660 USD per ton, they will cancel, and if the price is below this, the delivery will be delayed," he said.

Previously, many businesses in An Giang and Can Tho also negotiated with import partners of this country to propose a price of 680-700 USD per ton but did not receive agreement.

Businesses said that rice exports to the Philippines will temporarily slow down, but demand for rice from China, Indonesia, Malaysia and Africa remains high. Therefore, they believe that export rice prices may soon increase again in the near future.

Rice shop on Thong Nhat Street, Go Vap District (HCMC) on the morning of September 7. Photo: Thi Ha

In the domestic market , domestic rice prices are much higher than export prices. Data from VFA shows that domestic rice prices in the last week of August (from August 25 to 31) continued to be adjusted up from 79 to 254 VND per kilogram, depending on the type.

Specifically, each kilogram of brown rice grade 1 costs 12,646 VND, white rice grade 1 is 14,750 VND, 5% broken rice is 14,564 VND, 15% broken rice is about 14,333 VND and 25% broken rice is 14,033 VND.

At rice dealers in Ho Chi Minh City, the price of rice on September 7 at many stores was adjusted by 500 VND per kg compared to the previous week. Fragrant milk flower rice increased from 17,500 VND per kg to 18,000 VND, soft and fluffy rice increased to 22,500 VND, old cherry increased to 16,000 VND...

Mr. Nguyen Van Thanh, a rice dealer in Binh Tan District, said that rice is not currently scarce, but the price increases every day, making business difficult because it has to be adjusted constantly. For school and industrial kitchens, Mr. Thanh has to balance to not continuously increase prices to maintain long-term relationships.

"This time, I only imported enough to sell for the week. I didn't dare stock up because I was worried that if the price dropped, I would lose money when purchasing power was weak," he said.

At a rice shop on Pham Van Chieu Street (Go Vap), Mr. Lanh - the shop owner - said that in the past two days, the price of imported rice has increased by about 200-500 VND per kilogram, but he has not changed the price list because of sluggish purchasing power.

According to traders, the reason why rice prices in the domestic market increased faster than those for export was because the summer-autumn crop was almost gone. Therefore, many units bought goods to store in warehouses, causing prices to increase.

In a recent report to the Prime Minister, VFA noted that the rapid increase in rice prices has led to a breakdown in the supply chain from farmers to traders, rice mills and rice exporters. This has made it difficult for exporters to mobilize goods to fulfill signed contracts.

According to the Ministry of Agriculture and Rural Development, by the end of August, Vietnam's rice exports reached 3.17 billion USD, an increase of more than 36% over the same period last year. The average export price of rice in the past 8 months reached 542 USD per ton, an increase of 11.5% over the same period in 2022.

Thi Ha

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