Vietnamese rice prices rise to highest level in more than 15 years

Asian rice market

Parboiled rice prices from top exporters rose this week on tight supplies, pushing Vietnamese rates to their highest in more than 15 years and Indian rates to a two-month high.

Vietnam's 5% broken rice prices were offered at $660-665 a tonne on December 21, the highest since mid-July 2008, compared with $655-660 a tonne last week.

A trader in Ho Chi Minh City said tight supplies have pushed up rice prices.

Indian rice export prices rose along with an upward trend in other rice exporting countries and concerns about production.

India's 5% broken parboiled variety was quoted at $505-$512 a tonne this week, its highest in two months, up from $499-$506 last week.

With the widening gap between Indian rice prices and those of other countries, buyers are now willing to accept higher prices, said an exporter in the eastern city of Kolkata.

India's rice output is expected to fall this year for the first time in eight years, raising the possibility that New Delhi will extend export curbs to keep prices low ahead of general elections due in 2024.

Thailand's benchmark 5% broken rice prices rose to their highest since August 2023 at $646-$650 a tonne, compared with $640 a tonne last week.

Traders said the increase was due to large orders from the Philippines this week.

On December 18, Prime Minister Srettha Thavisin said Indonesia had informed the Thai government of its intention to buy two million tons of grain.

US agricultural market

Prices of agricultural products on the Chicago Board of Trade (CBOT) all increased in the session on December 22, led by wheat.

At the close of this session, corn prices for March 2024 delivery increased by 0.5 cents (0.11%) to 4.73 USD/bushel, while wheat prices for the same delivery period increased by 3.75 cents (0.61%) to 6.1625 USD/bushel.

Soybean prices for March 2024 delivery increased by 4.5 cents (0.35%) to $13.0625/bushel (1 bushel of wheat/soybean = 27.2kg; 1 bushel of corn = 25.4kg).

2024 will be volatile as geopolitical risks that emerged in 2023 will persist into 2024 and intensify.

Thus, countries with abundant grain production should increase their strategic reserves to prevent supply chain disruptions.

Northern and southern Brazil will see scattered rain until December 24. The chance of rain will gradually decrease next week. Temperatures in Brazil will remain at or above average.

World coffee market

At the end of the weekend trading session, Robusta coffee prices on the ICE Europe-London exchange reversed and decreased.

Robusta coffee futures for March 2024 delivery fell $127 to $2,837 a tonne and Robusta coffee futures for May 2023 delivery fell $104 to $2,766 a tonne. Trading volume was average.

Similarly, Arabica coffee prices on the ICE US-New York exchange also showed a downward trend.

Arabica coffee for March 2024 delivery fell 0.8 cent to 192.80 cents/lb and Arabica coffee for May 2023 delivery fell 0.85 cent to 190.25 cents/lb. Trading volume was average.

The price of green coffee beans in the Central Highlands provinces decreased by VND1,900-2,000, fluctuating in the range of VND67,000-68,000/kg. The price of fresh coffee was traded around VND15,000/kg.

Robusta coffee prices reversed sharply on the first day of announcement as funds and speculators rushed to liquidate to hedge against risks ahead of the long Christmas weekend.

Speculative capital flows into safe-haven assets have pushed gold prices up. Meanwhile, the market expects the US Federal Reserve (Fed) to start a cycle of interest rate cuts from March 2024 due to solid US economic indicators, better-than-expected personal consumption expenditure (PCE) index, and the US dollar index continuing to trend lower.

The semi-annual report of the Foreign Agricultural Service (FAS) under the US Department of Agriculture (USDA) has adjusted up the production forecast of some major Arabica coffee producing countries in the world such as Brazil, Colombia, and Ethiopia, leading to a 4.19% increase in global coffee production in the 2023-2024 crop year compared to the previous forecast, up to 171.40 million bags.

This figure will offset the decline in output in Indonesia, the main Robusta producer in Southeast Asia, which will decrease by 2.15 million bags, or 18.14% compared to the previous crop year, to only 9.7 million bags in the current crop year.

FAS also adjusted Vietnam's output in the current crop year 2023-2024 to reach 27.50 million bags, up 1.10%, compared to the previous crop year, including 26.62 million bags of Robusta coffee, up 1.22% and 880,000 bags of Arabica coffee, down 11.11% compared to the previous coffee crop year, but down 3.8 million bags compared to the previous estimate.

In addition, FAS also predicts that the coffee inventory carried over from the 2022-2023 crop year will be only about 339,000 bags of coffee, due to limited supply of the crop year.