Vietnamese rice prices are at risk of falling when India relaxes exports

On September 28, India lifted the ban on exporting non-basmati white rice, with the condition of imposing a floor price of 490 USD per ton. Previously, this country halved the export tax on basmati rice (long-grained fragrant rice from India and many South Asian countries), to 10%. This South Asian country has abundant supply with reserves reaching 32.3 million tons, up nearly 39% over the previous year.

The above move caused world rice prices to cool down, as supply on the world market increased. Last week, Vietnam’s 5% broken rice dropped to 560 USD per ton, down 20 USD compared to the previous week. Similarly, Thai rice also dropped to 550 USD per ton, the lowest level in more than a year.

The leader of a rice export business in Dong Thap said that India’s return to the market will put downward pressure on prices for 5% and 25% broken rice.

Mr. Dinh Ngoc Tam, Deputy General Director of Co May Company, also commented that rice prices will decrease but will hardly fall below 500 USD per ton, because domestic supply is not abundant.

In Indonesia’s bid for 450,000 tons of rice, Vietnam won 59,000 tons at a price of 548 USD per ton, down 32 USD compared to last week. Although rice prices have decreased, demand from major markets such as the Philippines, Indonesia, and Malaysia remains high, maintaining high demand pressure for Vietnamese rice.

With ST24 and ST25 fragrant rice, Mr. Tam predicts that the price of this type will be difficult to decrease, and may even increase due to scarcity of supply. This year’s Fall-Winter crop is affected by climate change, reducing productivity. Mr. Tam said that the production cost of ST 25 rice is over 32,000 VND per kg. However, since the beginning of the year until now, businesses have kept the retail price around 30,000-31,000 VND per kg, causing them difficulties.

According to the Vietnam Food Association (VFA), rice prices decreased last week and may continue to decrease. Currently, Vietnamese rice is still higher than Thailand and Pakistan.

The Ministry of Agriculture and Rural Development said that in the first 8 months of the year, Vietnam exported 6.16 million tons, earning nearly 3.85 billion USD. The average export rice price reached 625 USD per ton, up nearly 15% over the same period last year. Accumulated for 8 months, Vietnam has completed 81% of the plan and is expected to reach the target of exporting 7.6 million tons of rice this year.