January 22, 2012
Rice prices eased in top exporters Thailand and Vietnam last week due to thin demand and may be undermined further after India lifted its export cap, traders said on Wednesday.The export market in Vietnam has also slowed ahead of a long holiday next week to mark the Lunar New Year.
India has allowed the overseas sale of common rice in excess of two million tonnes, officials said on Tuesday, removing a previous cap imposed in September 2011.Stocks in Indian government warehouses stood at 29.8 million tonnes by January 1, above a target of 11.8 million tonnes.
This week Indian white rice rose to $440-$450 per tonne, on a free-on-board basis (FOB), from $430-$440 a week ago.
"India now has more to export, maybe an additional three or four million tonnes of rice," a Vietnamese trader said.Thailand's benchmark 100 percent B grade white rice dropped to $535 per tonne on Wednesday, from last week's $550 per tonne, hit by weak demand, traders in Thailand said.
Thai 5 percent broken grade white rice also fell to $520 per tonne on Wednesday, from $540 last week, well above Indian grain of the same grade.
"There's almost no buyers in the market.
We have seen this trend for a while," said a rice trader based in Bangkok."The rice pledging scheme has distorted market prices.
India and Vietnam sell rice at much lower prices than us and we will probably see our rice exports falling this year." The weakening trend of Thai rice prices has started since November, following the introduction of the government's rice pledging scheme that pushed prices up, making Thai grain less competitive than Vietnamese or Indian rice.Thailand's rice exports in 2012 could halve to 5 million tonnes due to the high prices.
In Vietnam the export market has already closed last week and only some domestic transactions remained this week, traders said.
"The market closed early for Tet while demand has been thin," said a trader in Ho Chi Minh City, referring to the country's biggest festival to mark Vietnam's Lunar New Year.Vietnam's market holidays run from January 21 to 29.
Port activities also slowed, with no rice vessels for Africa, one of Vietnam's traditional markets, while loading for top buyer Indonesia has nearly been completed, he said.
"Africa has been quiet and Vietnam now only hopes it could sell to regional countries such as Indonesia, the Philippines and Malaysia," the Ho Chi Minh City-based trader said.Indicative prices for Vietnam's 5 percent broken rice eased to between $450 and $455 a tonne, free-on-board (FOB), against $455 last Wednesday, and the 25-percent broken rice also dropped to $420 a tonne, from $430 a week ago.
"With a large volume of rice coming from the next winter-spring harvest, we do not know how much more prices could fall if there are no large deals to support," another trader said.The winter-spring rice crop, the country's largest, with harvesting due to peak in March, is projected to produce 11 million tonnes of paddy, up around 4 percent from 2011.
Buyers were expected to return to Vietnam next month in anticipation of lower prices due to the harvest, traders said.
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