Domestic rice prices hit new peak, export difficulties become more difficult

According to data from the Vietnam Food Association, the export price of 5% broken rice from Vietnam on September 6 fell sharply by 10 USD/ton compared to the session on September 5, to 633 USD/ton; 25% broken rice also fell by 10 USD/ton to 618 USD/ton. This is also the sharpest decrease since July 19.

However, the prices of 5% and 25% broken rice from Vietnam are still higher than those of the same type from Thailand by 5 USD/ton and 43 USD/ton, respectively; 20 USD/ton higher than 5% broken rice from Pakistan and 75 USD/ton higher than 25% broken rice.

Meanwhile, domestic rice prices in the last week of August (from August 25 to 31) continued to be adjusted up from 79 VND to 254 VND/kg depending on the type.

Specifically, the average price of rice in the field increased to 8,079 VND/kg, rice in the warehouse was 9,242 VND/kg, brown rice grade 1 was 12,646 VND/kg, white rice grade 1 was 14,750 VND/kg, 5% broken rice was 14,564 VND/kg, 15% broken rice was 14,333 VND/kg, 25% broken rice was 14,033 VND/kg,...

According to Mr. Pham Thai Binh, Chairman of the Board of Directors of Trung An High-Tech Agriculture Joint Stock Company, this is the price that traders buy. In the domestic market, because buying and selling goes through several intermediaries, the price that businesses buy is even higher.

The domestic rice price at this level is converted to an export price equivalent to 670-680 USD/ton. However, the export price of 5% broken rice from our country is currently at 633 USD/ton, meaning the domestic price is much higher than the export price. If businesses buy high and sell low, they will suffer heavy losses.

This is also the reason why many businesses do not dare to sign new rice export contracts, and have temporarily stopped purchasing rice to monitor the market and avoid losses.

For old contracts, businesses had to negotiate with foreign importers to adjust the price increase, but most of them were not approved. For small orders and traditional customers, businesses proposed to extend the delivery time until the winter-spring crop to harmonize the two sides, Mr. Binh said.

In a recent report sent to the Prime Minister, VFA also admitted that due to the rapid price fluctuations, the supply chain was broken from farmers to traders to rice mills and rice exporting enterprises.

The main reason is the psychology of waiting for prices, broken contracts, and difficulties for export enterprises in mobilizing goods to fulfill signed contracts.

Mr. Pham Thai Binh said that the Philippines, Indonesia and other countries importing 5% broken rice from Vietnam all have to pay high prices. They almost cannot accept buying rice at the price of 670-680 USD/ton.

In fact, in mid-August, the Philippines negotiated with Vietnamese exporters to buy rice at a price lower than the market price.

Recently, this country also imposed a price ceiling on retail rice in the domestic market - a move to stabilize rice prices and avoid manipulation and hoarding when retail prices increase at an alarming rate.

The Philippines is the world's largest rice importer and the largest customer of Vietnamese rice. In the first seven months of 2023, the country spent US$984.9 million to import nearly 1.94 million tons of rice from Vietnam, down 2.1% in volume but up 6.5% in value over the same period in 2022, accounting for 37.6% of Vietnam's total rice export turnover.

Rice exporting businesses reported that after the Philippines imposed a price ceiling on rice, some companies in this country asked to cancel contracts due to concerns about losses.

The fact that partner businesses have asked to cancel contracts or stop receiving goods will not affect rice exports in the last months of this year, because our country does not have much goods left for export. However, it is not yet possible to determine whether this will cool down rice prices in the Vietnamese market and to what extent.

According to the Ministry of Agriculture and Rural Development, by the end of August 2023, Vietnam's rice exports reached 3.17 billion USD, up 36.1% over the same period last year. The average export price of rice in the past 8 months reached 542 USD/ton, up 11.5% over the same period in 2022. Notably, at one point, the export price of 5% broken rice reached nearly 650 USD/ton.