The reason why Vietnam's rice export price suddenly left the peak

According to the Vietnam Food Association (VFA), the export price of rice at the end of this week's trading session was 613 USD/ton for 5% broken rice and 598 USD/ton for 25% broken rice, both down 30 USD/ton compared to the peak price set on August 31.

Not only Vietnamese rice but also Thai and Pakistani rice exports have decreased to 611 USD/ton for 5% broken rice and 608 USD/ton for 25% broken rice.

Notably, the world market is having a lot of positive information for sellers. For example, the Philippines has abolished the price ceiling policy, Indonesia has opened bidding for 300,000 tons of rice, Vietnam has not yet reached the main harvest season... So, why is the export price of rice decreasing?

Rice prices have recently dropped but are still about $100/ton higher than two months ago.

International rice market analyst, Ms. Phan Mai Huong, co-founder of SSResource Media Pte.Ltd (Singapore), said that the main reason for the sharp decline in export rice prices is due to reduced demand.

The Philippines - Vietnam's largest rice importer - is slowing down its purchases as traders are waiting for the government to finalize a plan to reduce import tax rates from 35% to 10% as proposed. The rather strong tax rate reduction will greatly affect traders' business activities. Meanwhile, traders still have goods to supply to the market so they are not in a hurry to buy.

Similarly, the African and Chinese markets still have inventories so they also import at limited levels in the context of rice prices being pushed too high in recent times.

"Although rice prices have decreased compared to the peak price, they are still high. For example, the price of 5% broken rice is currently higher than before July 20, when India banned exports. This is still a very good price. It is forecasted that from now until the end of the year, rice export prices will remain high," Ms. Huong commented.

A VFA leader said the market is currently in a short-term hiatus to match prices. In fact, even though they need goods, when prices are pushed too high, importers will not easily accept it. The general trend is that rice prices will remain high in the coming time as many countries have crop failures, and India's rice export ban is expected to last until 2024.

According to the Center for Digital Transformation and Agricultural Statistics - Ministry of Agriculture and Rural Development, the average rice export price in August 2023 was 23.3% higher than the same period last year; export volume increased by 22%.

Philippines, China, Indonesia are the three largest rice import markets of Vietnam.