Rice prices have dropped by up to 4 percent in Thailand in the past week and also eased in Vietnam due to a lack of demand ahead of the year-end holiday season, traders said on Wednesday. But some traders thought prices could rebound in the new year, especially if output from the current harvest in Thailand, the world's biggest exporter, proved to be much lower than usual after flooding in recent months.
The Thai benchmark 100 percent B grade white rice dropped to $540 per tonne, free on board, from $555 last week, and the 5 percent broken grain eased to $525 a tonne, around $20 lower than a week ago. Demand from exporters was weak as they had completed their buying needs before the holidays, a trader in Bangkok said.
In Vietnam, the world's second-biggest exporter, trading was similarly slow and no transactions were reported in the past week as buyers from European trading firms left for Christmas and year-end holidays, traders said. "Prices softened a bit, since there has been no demand," a trader in Ho Chi Minh City said. The indicative price for the 5 percent broken rice eased to $495, free on board Saigon Port, which was well below an industry floor of $540 a tonne. The 25 percent broken grain was quoted at $470 per tonne, or $10 under its floor. Already last week exporters said they had stopped making quotations because of the high floor prices and low demand.
"Thailand's 5 percent broken rice is at around $520 a tonne, so if Vietnamese exporters stick to the floor, they will have no buyers," the Ho Chi Minh City-based trader said. The Vietnam Food Association raised the export price floor to $540 a tonne from December 3 for 5 percent broken rice, and to $480 for the 25 percent broken grade.
Traders said the floors were raised in anticipation of demand by major importers such as the Philippines, the world's biggest rice buyer, and Indonesia. But Indonesia said on Wednesday it had secured 1.33 million tonnes of rice from Thailand and Vietnam for delivery until February 2011 and may not need additional imports next year.
Stocks in Vietnam have dwindled before the next harvest kicks in from late February 2011, and prices could drop further when fresh supplies arrive, traders said. The current harvest in Thailand could also weigh on prices, although some traders said the market could pick up in January and February if recent floods are seen to have cut output.
WEEK AHEAD Prices could drop more as harvesting in Thailand continues while buyers are away on holidays.
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