Vietnam cuts rice export floor prices

Vietnam has lowered floor prices for its rice exports, easing the minimum price for the benchmark 5 percent broken grain by 3 percent to $485 a tonne, but traders said Vietnamese prices are still uncompetitive compared with those of India. The floor for 10 percent broken rice was cut to $475 a tonne, free-on-board basis, from $495, and the new floor for the 25 percent broken variety would be $455 a tonne, down 3.2 percent, two traders at different foreign companies in Ho Chi Minh City said on Friday.
Late last month the Vietnam Food Association, which oversees the industry, imposed rice export floor prices for the first time since March after market prices fell to their lowest in six months, with thin demand expected to last into the new year. "The new floors are still very high, so it will not help stir up new demand," one trader said, adding that the floors were adjusted in the hope that Vietnam could win a tender to sell rice to the Philippines next month.
Officials at the food association could not be reached for a comment. The Philippines' state grains trading agency said it may hold a bidding session next month for permits allowing private importers to buy up to 500,000 tonnes of rice this year, but added that actual buying could have started even before permits are awarded. The Philippines was Vietnam's second-largest rice buyer after Indonesia in 2011, having taken deliveries of 972,000 tonnes of the grain in the January-November period, down 34 percent from 2010, Vietnam's Agriculture Ministry data show.
"The lower floor prices could also help legalise loading by some companies which have agreed to sell rice far below the previous floors," the second trader said, declining to gave volume or buyer details for the new deals. He said several exporters may have agreed to sell 5-percent broken rice at $460 a tonne, FOB, but they could not get permission for loading given the previous floor of $500 a tonne.
Vietnam plans to export 7 million tonnes of rice this year, after a record 7.1 million tonnes in 2011, a state-run newspaper said, citing annual targets from the Industry and Trade Ministry. Rice from Vietnam and Thailand, the number one exporter, has been facing fierce competition from cheaper grain from India, which should ensure that India remains the only seller in the market for the time being, traders said on Wednesday. India's common white rice grades were quoted this week at $415-$435 a tonne, FOB, down from $430 to $450 late December.