Reasons why Thai rice prices increase while Vietnamese rice prices remain unchanged

After reaching the historic mark of 663 USD/ton at the end of October 2023, in early November 2023, the price of 5% broken rice in Vietnam "cooled down" by 10 USD/ton, down to 653 USD/ton and has remained at this price until now.

Vietnamese rice prices have remained stable for more than a week.

In contrast to Vietnamese rice, Thai 5% broken rice has been increasing continuously over the past week. Specifically, according to an update from the Vietnam Food Association (VFA), the price of Thai 5% broken rice has increased by 13 USD/ton compared to last week, to 578 USD/ton.

With the above increase, the price of Thai rice is currently 10 USD higher than the same quality product from Pakistan but still 75 USD lower than Vietnamese rice.

The reason for the increase in Thai rice prices is explained by the fact that the Thai government has approved a supplementary budget package worth 56 billion baht to provide support measures for the rice industry. Bringing the total state spending to support rice in the 2023/24 harvest season to 111 billion baht. Thai authorities estimate that this program is expected to benefit 4.68 million households in addition to helping absorb (temporarily store) about 3 million tons of rice.

Regarding export output, according to the leader of the Thai Ministry of Commerce, in 2023, this country can export about 8.5 million tons of rice, an increase of 0.5 million tons compared to the plan at the beginning of the year. In 2024, the amount of rice exported may decrease to 7.5 million tons because India is likely to loosen export restrictions.

Regarding Vietnam, explaining the reason why rice prices have been "stagnant" for more than a week, opinions point out that: Vietnam's export rice prices are currently at a very high level, so it will be difficult to increase further. "If the price increases further, it will be difficult to sell and buyers will look for other sources of supply with better prices" - said Mr. Phan Van Co, Marketing Director of Vrice Company Limited.

In addition, the domestic rice supply is not much left to sell, so transactions are quite slow at the moment. Even when export prices increase, domestic prices also increase accordingly. It is worth noting that, according to many rice exporting enterprises, with the average rice price in the market being 9,100 - 9,200 VND/kg, the current export price of 5% broken rice must be over 700 USD/ton for enterprises to make a profit (currently the offering price is at 653 USD/ton, and selling at this price enterprises will certainly lose money).

In fact, according to VFA, the rice market is experiencing many fluctuations and is always on an upward trend. According to Mr. Do Ha Nam, Vice President of VFA, in the current situation of Vietnam's rice prices increasing rapidly, some businesses have suffered heavy losses and canceled contracts, especially with units with weak financial capacity.

For large enterprises that are almost finished delivering goods, in order to maintain their reputation with their partners, they are forced to buy at high prices to have enough goods to fulfill the contract. This is one of the main reasons for the high price of rice.

Mr. Nam said that the high price of rice is not necessarily an advantage because customers will look for other markets with better prices and quality equivalent to Vietnamese rice. This leads to the risk of losing the fragrant rice market to Thai businesses because the price of rice from this country is very competitive with Vietnamese fragrant rice.

According to inter-ministerial data, it is estimated that by the end of October 2023, Vietnam will export 7.1 million tons of rice with a value of about 3.97 billion USD, up 17% in volume and 34.9% in value over the same period in 2022. The average export price is estimated at 558 USD/ton, up 15.3% over the same period in 2022.

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