Vietnam's Rice Exports May Surge to Record

Rice exports from Vietnam, the second-largest shipper, may rise to a record 6 million metric tons in 2009 aided by lower prices, narrowing the gap with bigger rival Thailand, according to U.S. forecasts.

The price of Vietnam's 5 percent broken-grain variety fell to about $398 per ton this month, $163 a ton cheaper than Thailand's competing grade, the U.S. Agriculture Department said. That compares with Vietnam's price in April of $460 a ton, which was $112 less than Thailand's, it said.

Global rice prices surged to a record last year amid rising demand and temporary trade curbs by some growers including Vietnam, which wanted to safeguard local supplies. Do Huu Hao, a deputy minister of trade and industry, forecast this month that Vietnam may ship 7 million tons after a "good harvest."

"Vietnam's price quotes are well below Thailand's price quotes, making Vietnam a very competitive supplier," Nathan Childs and Katherine Baldwin of the U.S. Agriculture Department wrote in an Aug. 13 report.

The lower prices may push Vietnam's exports this year 29 percent higher than the level in 2008 and surpass 2005's record 5.2 million tons. Thailand will probably ship 8.5 million tons this year, down 15 percent from 2008 and the lowest level in three years, the U.S. forecast.

Food Crisis

Rice futures in Chicago peaked at $25.07 a hundred pounds in April 2008, fuelling concerns that there may be a worldwide food crisis marked by civil unrest and shortages for the poorest. The most-active contract on the Chicago Board of Trade, for November delivery, closed yesterday at $13.44.

Vietnam's shipments "may put some dampener on the price in the region," Ben Barber, a futures adviser at Bell Commodities Ltd., said from Melbourne today. Still, "in the grand scheme of things, a couple of million tons extra is not that big."

Increased exports from Vietnam may not be enough to offset lower supplies from India after rice acreage in the second- largest producer fell because of drought, Barber said. The U.S. Department of Agriculture this month cut its forecast for India's exports to 1.5 million tons from July's prediction of 4 million tons.

Vietnam's rice exports are benefiting from an "excellent harvest," competitive prices and "ample" stockpiles, the United Nations' Food and Agriculture Organization said last month. The Vietnamese government is encouraging more rice exports amid weakened demand for the country's goods because of the global economic downturn, the agency said in a report.

Increased Exports

Rice shipments from Vietnam jumped 46 percent by volume in the seven months through July to 4.28 million tons, according to the General Statistics Office in Hanoi.

Vietnam exported 4.65 million tons in all of 2008, according to the U.S. Foreign Agricultural Service, which cited the Southeast Asian country's "aggressive export pace" in raising its forecast this month for 2009 shipments.

Vietnam's government was aiming to ramp up the volume of rice shipments this year to make up for a decline in prices, according to Deputy Minister of Trade and Industry Hao on Aug. 6. Exports so far totaled about 5 million tons, Hao said then.

Overseas demand for Thai white rice "remains quiet, as Vietnamese prices are $150 per metric ton cheaper," Ponnarong Prasertsri, an agricultural specialist at the U.S. Embassy in Bangkok, wrote in a report dated Aug. 5.