Selling rice early, Vietnam lost 420 million dollar

The Vietnam Food Association (VFA) late last week had a meeting to review the rice export in the first nine months of 2010. The most important news heard at the meeting was that Vietnam sold most of the rice before, when the price was low. Now when the price keeps increasing, it has nothing to sell.

According to VFA, by the end of September 2010, Vietnamese enterprises had signed the contracts on exporting nearly 6.5 million tons of rice. If counting on the volume of 300,000 tons of 15 percent broken rice Vietnam has just sold to Indonesia, the total export volume will be 6.8 million tons, higher than the targeted volume of 6-6.5 million tons set for 2010.

To date, Vietnamese exporters have delivered 5.393 million tons, while the other 1.4 million tons will be delivered from now until the end of the year.

According to the Ministry of Agriculture and Rural Development (MARD), if everything goes smoothly, the total rice output from now until the end of the year would be 1.3-1.5 million tons which is enough for rice export contracts (about 1.4 million tons). However, what the weather is like remains an unknown

VFA’s Chair Truong Thanh Phong has admitted that Vietnam will not be able to sell all the autumn and autumn-winter crop rice, because a part of the rice will be used for the export contracts in early the next year, estimated at 200,000-300,000 tons.

Since the beginning of September, VFA has been continuously adjusting the floor export prices (No enterprise is allowed to export rice at the prices lower than the floor prices), which is understood as the measure to restrict exports. Once the floor price rises to $475 per ton (five percent broken rice) and $445 per ton (25 percent broken rice), no enterprise will be able to export products, because the actual prices in the market are lower.

In September, Vietnamese enterprises signed the new contracts on exporting 195,000 tons of rice, a sharp fall of 80 percent over August. Of this amount, the volume of rice exports under the contracts gained from the bids organized by the governments of import countries was 110,000 tons.

At the last week’s meeting, a lot of rice export companies admitted that they were too hasty to sell rice, when the prices were low. Meanwhile, now when the prices are increasing, they have nothing more to sell.

Statistics showed that in the period from April to August, when no floor price was set, Vietnamese enterprises exported more than 3.5 million tons of rice at $320-350 per ton (5 percent broken rice) and $290-310 per ton (25 percent broken rice). If comparing the export prices with the currently applied floor prices, exporters would lose at least $120 for every exported ton, and lost $420 million in total.

Analysts say it is really very difficult to give forecasts about the rice market, because the market is influenced by the weather, which is unpredictable thing. However, they say that Thailand, the biggest rice exporter in the world, always has better solution in such circumstances. Instead of selling rice in big quantities, Thai exporters kept rice in stocks and they began selling rice in the market in July, when the price began rising.

The analysts believe that with the storage capacity of three million tons as announced by VFA, Vietnamese enterprises can follow Thai exporters’ way.- Saigon tiep thi

Tags: Vietnam agriculture, Vietnam rice