[NEWS] - Export rice prices are high but why are businesses hesitant to sign new contracts?

In the first week of 2024, world rice export prices continued to stand at a high level, but businesses did not dare to close new contracts.

A quiet week

According to data from the Vietnam Food Association (VFA), in the first week of 2024, export rice prices from Thailand, Vietnam, and Pakistan did not change compared to the last days of 2023. 

Specifically, in the 5% broken segment, rice from Vietnam and Thailand currently has the same price of 653 USD/ton, far surpassing Pakistani rice of the same quality at 60 USD/ton - this country’s 5% broken rice is currently at the same price 593 USD/ton.

In the 25% broken segment, Vietnam’s rice is currently priced higher than other sources with a stable price of 633 USD/ton, second place is Thailand with a price of 589 USD/ton, and Pakistan is currently at 513 USD/ton.

World supply and demand continue to fluctuate

Although unchanged, global rice prices are currently considered high, which is beneficial for sellers, because demand continues to be high. For example, in the Philippines, according to officials from the Department of Agriculture (DA), the country’s national consumption is about 36,000 tons/day, equivalent to about 1.08 million tons/month and the country’s rice supply will be enough for until the start of the next harvest in March 2024.

However, according to a forecast from the Food and Agriculture Organization of the United Nations (FAO), although the Philippines’ secondary rice growing has been carried out, below-average rainfall in rice growing areas may affect sub-crop rice production (below-average rainfall and rising temperatures are forecast to occur between December 2023 and March 2024) due to the ongoing El Nino phenomenon. Since then, FAO forecasts that the country’s rice imports in 2024 will remain high.

For Bangladesh, forecasts show that the country’s supply is not enough compared to domestic demand and still has to depend on imports. Specifically, in terms of supply, USDA has lowered the forecast for milled rice production in the 2023/24 crop year (May 2023 - April 2024) of Bangladesh to 36.3 million tons (from 36.4 million tons). previous official forecast). This forecast is down slightly from the previous year’s estimate of 36.35 million tons. This decrease is due to partial damage to the Aman rice crop in some coastal districts due to storm "Midhili" on November 17, 2023. Meanwhile, in terms of demand, USDA kept Bangladesh’s 2023/24 rice consumption forecast unchanged at the official level of 37.7 million tons due to lower rice production and import forecasts. The forecast is up slightly from the previous year’s estimate of 37.6 million tons.

In addition, other countries including Indonesia, and Malaysia... are also forecast to have large demand in 2024. From there, experts predict that global rice prices are not expected to decrease before 2025. Regarding the cause, the report said due to export restrictions from major producing countries and the threat from the EI Nino phenomenon.

Enterprises do not dare to sign new contracts

According to Vietnamese rice exporting businesses, the market continues to record import demand from countries such as the Philippines, and South Korea... However, businesses also said that high prices limit imports. new transactions and they are focusing on delivering signed orders.

Sharing with reporters, Mr. Phan Van Co-Marketing Director of Vrice Group Co., Ltd. - said that the price of exported rice since mid-2023 has pushed up domestic rice prices to a very high level.

Mr. Co also said that very high domestic prices push up the price of exported finished rice, making international prices uncompetitive so customers do not buy. “Vietnamese rice prices are currently almost the highest in the world, so new contracts are almost non-existent. Even though many parties are asking to buy, the high price makes businesses not dare to sign" - Mr. Co informed.

In fact, in a report released by VFA, the fact that Vietnam’s rice export prices continuously stand at the highest level also causes a loss of competitive advantage. Accordingly, the price of Pakistani rice is currently at the most competitive level in the world rice trade market (5% broken rice is currently about 60 USD/ton lower than that of Vietnam and Thailand). In addition to Pakistan, Burma (Myanmar) is also considered to be the choice of many importing countries when the country’s export price of 5% broken rice is currently at 613 USD/ton. "Rapid increases in rice export prices from Thailand and Vietnam also contribute to helping Burma become the dominant choice at this time" - VFA said.

Thanh Long (Collection source)