Vietnam to delay rice stockpile as prices stay high

Vietnamese rice exporters will delay for an indefinite period an industry plan to buy 1 million tonnes of milled summer-autumn paddy for a three-month stockpile due to high prices, state-run newspapers cited industry officials as saying on Wednesday.

They had planned to buy the grain on domestic markets between July 15 and Aug. 30 to prevent price drops to below 5,000 dong (24.4 U.S. cents) per kg, a typical move to support prices as the Mekong Delta harvest peaks.

But the summer-autumn grain, used to produce 15% broken and 25% broken varieties and mostly sold to Africa, Indonesia and the Philippines, rose to 5,600-6,500 dong per kg this week, from 5,400-6,200 dong last week.

Prices are rising thanks to demand from Africa, Bangladesh and potential purchase by Indonesia, as buyers switched to seeking Vietnamese grain after Thai rice prices had increased due to political reasons, traders said.

The export price of Thai rice rose this week on the likelihood of aggressive intervention by the new Puea Thai Party government to push up domestic prices to help farmers, which has already persuaded traders to hoard rice, leading to tight supply.

Last week traders and a Vietnamese state-run newspaper said Indonesia has been in talks to import between 400,000 and 600,000 tonnes of rice from Vietnam to capitalise on lower prices.

But Indonesia has yet to decide whether to import more rice this year, a senior trade ministry official said last Thursday.

The Vietnam Food Association, the industry body which initiated the stockpile plan, made an agreement on Tuesday to delay the purchase, citing the high prices, the Nong Thon Ngay Nay (Rural Today) newspaper run by the Vietnam Farmers Association said.

“It is the fact that farmers sell all the summer-autumn rice as soon as it is harvested,” Chairman Truong Thanh Phong was quoted as telling an industry meeting in Ho Chi Minh City to review rice production and export in the first half.

Phong gave no new timeframe for the stockpile but said the 80 food companies which have received their buying quotas will start the purchase if prices drop.

On Tuesday, the association raised Vietnam’s annual rice export projection to between 7.0 million and 7.1 million tonnes, above its initial estimate of 6.5 million tonnes, after a record shipment of 3.91 million tonnes in the first six months.

The association planned loading of 1.9 million tonnes in the third quarter ending September and another 1.2 million tonnes in the fourth quarter, the official Vietnam News Agency said.

The revised target is in line with a government forecast of between 7.1 million and 7.4 million tonnes.

The Southeast Asian country, the world’s second-largest rice exporter after Thailand, shipped a record of 6.83 million tonnes of rice in 2010. ($1=20,530 dong) -Reuters

Tags: Vietnam Rice stockpile