Paddy output from Vietnam's largest rice crop is forecast to rise 5 percent to 10.4 million tonnes this year, with increased supply likely to weigh on prices as demand for the Asian staple remains thin. Rice prices in Vietnam, the world's second-largest rice exporter after Thailand, fell around 4 percent this week as the winter-spring harvest entered its peak in the Mekong Delta.
The Vietnam Food Association said on Wednesday it will cut the floor price for rice exports by 2-4 percent from March 12. The higher output "does have some impact to cause prices to fall, and if Vietnam did not have the purchase-for-stockpiling in place, prices could have fallen more," said a Vietnamese trader in Ho Chi Minh City.
With the harvest now peaking, the Delta's output in March would jump around 40 percent to 5.2 million tonnes of paddy, or unhusked rice, from 3.7 million tonnes harvested in January and February, the Vietnam Food Association said in its weekly report on Friday. Farmers in the Mekong Delta will reap another 1.5 million tonnes of paddy next month to wrap up their harvest, the food association's report said, citing Agriculture Ministry data.
Last year the Delta's winter-spring crop produced 10.27 million tonnes of paddy, above the 9.9 million tonnes projected. Winter-spring paddy prices stood at 5,000-6,200 dong (24-29.7 US cents) per kg in the Delta this week, 38 percent higher than a year ago.
AMPLE SUPPLIES Located in southern Vietnam, the Mekong Delta produces around half of Vietnam's total rice output but supplies 90 percent of its exportable grain. Vietnam is targeting to export between 6 million and 6.5 million tonnes of rice this year after shipping a record 6.83 million tonnes in 2010.
The Philippines said this week it would buy 200,000 tonnes of Vietnamese rice in a government deal and also start the bidding process next week for private firms to import up to 660,000 tonnes from Vietnam, Cambodia and Thailand. Last Friday Bangladesh said it would also buy 200,000 tonnes of rice from Vietnam in a government deal to ensure supplies of the staple at a time of record global food prices.
Prospects of ample supplies from Vietnam's main harvest have offset the impact on prices of the demand from the Philippines and Bangladesh plus industry purchases backed by the Vietnamese government to build up stockpiles. Milled rice grade 2, used for making 25 percent broken rice often exported to the Philippines, stood at 7.0-7.1 million dong ($336-$340) a tonne in the Mekong Delta province of An Giang on Friday, unchanged from Thursday but down nearly 10 percent from a week ago.
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