Vietnamese rice prices hit new peak, global supply drops sharply

Data from the Vietnam Food Association (VFA) shows that after many days of stability at 653 USD/ton, the price of 5% broken rice in our country suddenly increased by 10 USD/ton in the trading session on November 21 to 663 USD/ton. With this price, Vietnamese rice officially set a new peak.

Currently, the export price of 5% broken rice from our country has increased by 190 USD/ton compared to February 1 this year, equivalent to an increase of 40.2%. Accordingly, the price of Vietnamese rice is higher than the same type of rice from Thailand and Pakistan by 78 USD/ton and 85 USD/ton, respectively.

The export price of 25% broken rice from our country is stable at a high level of 648 USD/ton, 107 USD/ton higher than the same type of rice from Thailand and 152 USD/ton higher than Pakistani rice.

According to preliminary statistics from the General Department of Customs, as of November 15, Vietnam exported nearly 7.4 million tons of rice, worth an estimated 4.16 billion USD - the highest level since 1989. Rice has also become the fourth largest export commodity in the agricultural sector, behind only wood, seafood and vegetables.

According to calculations by the Ministry of Agriculture and Rural Development (MARD), this year our country can export about 8 million tons of rice, with an expected turnover of 4.5 billion USD.

Experts and businesses believe that the world rice market will continue to be active at the end of the year and early 2024 due to scarce supply. Therefore, rice prices will remain high and will be difficult to fall below the threshold of 640-650 USD/ton.

However, the high price of Vietnamese rice is not necessarily an advantage but will pose many risks. Enterprises do not dare to stockpile goods. Along with that is the risk of losing the market because the competitiveness of Vietnamese rice will decrease compared to competitors.

In November, the US Department of Agriculture (USDA) raised its forecast for global rice consumption in 2023-24 by 1.6 million tonnes to a record 525.2 million tonnes, as consumption in India is expected to be higher following the government's decision to expand food assistance programmes.

Total global rice supply in 2023-24 is expected to reach 692.6 million tons, up 1.6 million tons from the previous forecast, but 3.6 million tons lower than in 2022-23 and the second consecutive year of decline in global rice supply.

The decline in global supply in 2023-24 compared to the previous season is the result of an 8 million tonne decline in opening stocks to 174.8 million tonnes, more than offset by a 4.4 million tonne increase in global production.

USDA also raised its forecast for global rice trade in 2024 by 400,000 tons to 52.7 million tons (mainly due to increased Brazilian rice exports), but down about 600,000 tons from the 2023 estimate of 53.3 million tons.

Rice market research expert Pham Quang Dieu warned that in 2024, our country's inventory will be very low. Therefore, businesses must be extremely cautious when signing long-term contracts. Because signing many contracts but not anticipating limited supply and credit difficulties, when rice prices rebound, businesses will face risks.

Mr. Nguyen Nhu Cuong - Director of the Department of Crop Production (Ministry of Agriculture and Rural Development), said that in the 2023-2024 winter-spring crop, the whole country is expected to plant about 3 million hectares of rice, with an expected output of 20.12 million tons, an increase of 113,000 tons over the same period in 2022.

Regarding rice exports, he noted that businesses must proactively coordinate with the functional agencies of the Ministry of Industry and Trade, the Ministry of Agriculture and Rural Development... to promptly grasp information and forecast trends in the rice market.

For example, when will India continue to ban the export of regular rice; what is the production and export situation of Thailand, Cambodia, Pakistan? By grasping the information, businesses can calculate the time to sign rice export contracts, minimizing risks in price as well as supply, Mr. Cuong emphasized.