How much will rice export prices increase?

In recent days, the domestic and export rice markets have been surprisingly vibrant beyond all forecasts when the Indian Government issued a ban on rice exports on July 20. According to the Vietnam Food Association, on July 27, Vietnam's rice export prices continued to increase by 10 USD/ton for the 5% and 25% broken rice segments compared to the previous day, reaching 558-562 USD/ton for 5% broken rice and 538-542 USD/ton for 25% broken rice. In just the last 3 sessions, Vietnam's rice export prices have increased by 25 USD/ton.

It is known that this is also the highest offering price that Vietnamese rice enterprises have offered since July 2021.

Rice export prices increase sharply after India's rice export ban

In fact, compared to July 20 - the time when India issued a ban on white rice exports, Vietnam's offering price has increased by 25 USD/ton for both the 5% and 25% broken segments. Previously, on July 20, Vietnam's 5% and 25% broken rice were offered at 533-537 USD/ton and 513-517 USD/ton, respectively.

Meanwhile, compared to the price set in early 2023, the current price of 5% and 25% broken rice offered by Vietnamese businesses has increased by about 85 USD/ton.

Similarly, the export price of 5% broken rice from Thailand has exceeded the 600 USD/ton mark. In the last 4 trading sessions, the export price of 5% broken rice from Thailand has increased by 53 USD/ton.

Mr. Do Ha Nam - Vice President of Vietnam Food Association said that rice prices have fluctuated strongly in the past few days with an upward trend. The reason for the increase in rice prices is because India banned rice exports.

Domestic and export rice markets have been increasing continuously in recent days.

According to Mr. Nam, India is the world's largest rice exporter, so any move related to the country's rice exports will affect the global market, especially for countries that use rice as a staple food.

“Since India’s ban on rice exports, although there have been no problems with the consumer market, the ban has caused rice prices to increase sharply. Import partners have proactively sought out Vietnamese businesses to buy rice, offering prices 10-20 USD/ton higher than before India banned the export of this item . However, the sudden price increase has made businesses more cautious when trading. Because they do not know how much rice prices will increase,” said Mr. Do Ha Nam.

The winter-spring crop with the largest output has passed, so the total output for export this year will decrease. While supply cannot meet demand, export businesses will be affected.

In fact, market research firm Fitch Solutions (USA) forecasts that the world rice market is expected to have a supply shortage of up to 8.7 million tons in the 2022/2023 crop year - the highest shortage in the past 20 years.

Many export enterprises predict that the current supply is less than demand, so the price is expected to increase sharply. It is very likely that the export price of rice on the world market will once again reach the 1,000 USD/ton mark.

Mr. Nguyen Van Thanh, Chairman of the Board of Directors and General Director of Phuoc Thanh IV Production - Trading Company Limited, said that in response to the news that India has banned rice exports, many businesses in the industry have temporarily stopped bidding for new contracts to focus on previously signed contracts.

India’s move comes as global supply has recently been limited, so many customers have switched to ordering Vietnamese rice. However, according to Mr. Thanh, businesses are currently focusing on returning goods for signed orders. On the other hand, the purchase price of rice is increasing, so many businesses are worried because the export price of rice has not kept up.

Mr. Thanh said that India's move opens up opportunities for businesses with inventory, but poses risks for businesses without inventory. "It is not yet known how long India's policy will last. If we buy a lot and then suddenly India lifts the announcement, we will rush to sell at a loss," Mr. Nguyen Van Thanh predicted.

Sharing the same view, Mr. Do Ha Nam said that when prices go up, they will have to go down. When prices go down, if businesses do not promptly boost sales, there will be many risks. For now, businesses should buy goods first and then sell them. This is beneficial for farmers when it comes to the harvest season and helps businesses reduce risks.

According to preliminary data from the General Department of Customs, in the first half of July 2023, the country exported 249,273 tons of rice, with a turnover of 135.45 million USD. From the beginning of the year to July 15, the country exported more than 4.48 million tons of rice, with a turnover of nearly 2.4 billion USD, an increase of more than 17% in volume and 28% in turnover over the same period last year.

Because the turnover grew higher than the volume, the average value of each ton of exported rice this year is also higher than the same period in 2022.

Also as of July 15, the average value reached more than 530 USD/ton, while in the same period last year it was only nearly 490 USD/ton.

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