Thailand and Vietnam to discuss rice pricing strategy

Thai rice exporters plan to gather with Vietnamese partners and the Vietnam Food Association (VFA) in mid-September, to discuss the possible impacts of the Thai new policy on supporting agricultural development on the rice prices.

With the new policy initiated by the new Thai Government, the prices of Thai rice will increase, which will surely affect the competitiveness and the global rice supply. Meanwhile, Thai Chair of the Rice Exporters’ Association, Chookiat Ophaswongse, believes that the new policy application proves to be the opportunity for both Vietnam and Thailand to adjust their rice export strategies.

The administration of Thai newly elected Prime Minister, Yingluck Shinawatra, has committed to purchase rice from farmers at high prices, about 15,000 baht per ton of rice in the crop to be harvested in November 2011, which aims to help increase farmers’ income.

Experts believe that the new policy would make Thai price more expensive. The price of five percent broken rice, for example, is expected to increase to 800 dollars per ton from the current level of 550 dollars.

The price increases will certainly affect the competitiveness of Thai rice, because international importers will shift to place orders with the exporters who offer lower prices, including the exporters from Vietnam or Cambodia.

The experts also said that Vietnamese rice price has become very competitive, with five percent broken rice now traded at 550-560 dollars per ton, or 30 dollars cheaper than Thai rice. The price gap between Vietnamese and Thai rice once reached 100 dollars per ton.

Meanwhile, some foreign press agencies have reported that Vietnamese five percent broken rice is now on offered at 545-560 dollars per ton (FOB), while the same kind of Thai rice at 555 dollars per ton.

“This will cause psychological impacts, because exporters, producers and farmers now all try to increase rice reserves,” Mr Chookiat said.

According to the Permanent Secretary of the Thai Ministry of Trade, Yanyong Phuangrach, Thailand now has five million tons of rice in reserve, while the government holds more than two million tons.

Mr Yanyong Phuangrach also believes that Vietnam can raise its export prices to the levels equal to that of Thailand’s. In August 2011, Thailand exported 810,000 tons, raising the total export volume in the first eight months of the year to 8 million tons, while the country hopes the figure would be 11 million tons in the whole year 2011.

Meanwhile, Pham Van Bay, Deputy Chair of VFA, said that the Vietnamese rice export price increase over the last month proves to be the main reason which has brought losses to many enterprises. The export price increases have led to the sharp price increases in the domestic market. As a result, Vietnamese exporters have to collect rice from farmers at high prices to fulfill the deliveries for the contracts signed before at low export prices.

Vietnamese 15 percent broken rice price has climbed to 520-525 dollars per ton, while five percent broken rice to 540-545 dollars per ton.

Bay believes that it is certain that a lot of Vietnamese exporters cannot collect enough rice to deliver to the importers, though Bay has not received any official information about that.

Several days ago, Chair of the Thai Rice Exporters’ Association, Korbsook Iamsuri, said that Chinese and Singaporean clients are seeking to purchase 200,000 tons of rice from Thailand, because some Vietnamese exporters cannot fulfill the signed contracts.

The Wall Street Journal has quoted Chookiat Ophaswongse, Managing Director of Huay Chuan Rice Export Company, as saying that “the cancellation of rice export contracts by Vietnamese enterprises would lead to the Thai rice demand increase of 100,000 tons in the time to come.”

However, Chookiat thinks that the importers from Africa and the Middle East may agree to pay higher prices to purchase Vietnamese rice, which could be a good choice because Thai five percent broken rice is as high as 550 dollars per ton already.

Source: Nong nghiep VN

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