imageHANOI: Export prices of Vietnamese rice picked up this week on demand from China, Indonesia and the Philippines and due to damage from dry weather, while ample supply put pressure on Thai rice prices, traders said on Wednesday.

The price rise in Vietnam however could be short-lived, as harvesting of the winter-spring crop, Vietnam's biggest, is expected to peak in the Mekong Delta food basket in coming weeks, traders said.

Prices of 5-percent broken rice rose to $355-$365 a tonne, free-on-board (FOB) Saigon Port, from $350-$360 a week ago, and the 25-percent broken rice prices advanced to $340-$350 a tonne, from $330-$335 last week.

“The volume of newly harvested rice has not picked up yet, while domestic prices are firming after some forecasts of a serious dryness in the Mekong Delta, pulling up export prices," a trader at a foreign firm in Ho Chi Minh City said.

Salination has become a serious issue in several Mekong Delta provinces, damaging 100,000 hectares (247,000 acres), or 6 percent of the winter-spring crop, the government said on its news website on Wednesday. (www.baochinhphu.vn)

Loading for Indonesia and the Philippines under contracts signed last year, and fresh enquiries from China, Vietnam's top rice buyer, also lifted prices, traders said.

“But prices could weaken from mid-March at the peak of the harvest," a Vietnamese exporter in Ho Chi Minh City said.

All winter-spring paddy now being harvested could be fully bought, keeping prices stable, a report on a government website quoted the Vietnam Food Association as saying.

The association will not seek government-backed rice purchases for stockpiling, the report added.

Last year, China's imports of Vietnamese rice rose 32.7 percent from 2014 to 1.79 million tonnes, making the southern neighbour its biggest grain seller, followed by Thailand with 931,000 tonnes, based on Customs of China data.

Thailand and Vietnam are the world's second- and third-largest rice exporters after India.

In Thailand, ample supply from the government and an ongoing harvest extended pressure on prices, traders said.

“The government sold rice directly to private firms, so they didn't have to buy from rice millers," a senior trader said, referring to a government auction last week, at which more than 152,000 tonnes were sold.

Quotations of Thai 5-percent broken rice narrowed to $373-$375 a tonne, FOB basis, from $370-$375 last Wednesday.

Thailand expects to export 9.5 million tonnes of rice this year, focusing on markets in Asia, Europe, Africa and the Middle East, a senior commerce ministry official said on Wednesday.

Copyright Reuters, 2016