A supply crunch in drought stricken Thailand pushed rice export prices to their highest in 6-1/2 years this week, while Vietnamese rates bounced back to a more than one-year high on firm demand. Thailand's benchmark 5% broken rice prices jumped to $460-$467 per tonne on Thursday, their highest since August 2013, from $430-$452 last week.
"Most of the demand is from domestic buyers who are stocking up rice amid fears of shortages," a Bangkok-based trader said. The protracted drought in many rice producing areas caused market concerns over possible supply shortages and is the main reason for the price hike as overseas demand remained flat, traders said.
The dry season, which usually starts in November and lasts until April, could persist into June, the Thai government said. In Vietnam, rates for 5% broken rice rose to $390-$400 on Thursday, their highest since December 2018, versus $365-$375 a week earlier on strong demand.
"The Philippines remains the largest buyer, and we have seen more orders coming in from Malaysia, Cuba and Africa," a trader based in Ho Chi Minh City said. Vietnam's rice exports in the first two months of this year likely rose 11.5% from a year earlier to 811,000 tonnes, the government's General Statistics Office said on Saturday.
"The strong demand has outpaced the rise in supplies as local farmers are still harvesting rice from the winter-spring crop," another trader in the city said, adding that farmers have harvested 60%-70% of the crop. Meanwhile, in top exporter India, rice export prices extended losses due to weak demand and as rupee fell to the lowest level in 16 months.
India's 5% broken parboiled variety rates inched lower to $367-$371 per tonne this week, from last week's $369-$373. "Weak rupee is allowing us to lower prices in dollar terms, but still demand is not picking up," said an exporter based at Kakinada in the southern state of Andhra Pradesh.
Weak rupee increases exporters margin from the overseas sale. Neighbouring Bangladesh has set a production target of 20 million tonnes for summer variety rice crop "Boro", for the current year, a senior agriculture ministry official said. Boro contributes more than half Bangladesh's typical annual rice output of around 35 million tonnes. In 2019, the country produced a record 20.4 million tonnes of Boro, up from 19.6 million tonnes the previous year, the agriculture ministry says.
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