Vietnam's Rice Prices to Fall on Central Bank Move, Lower Floor
Hanoi. Rice export prices in Vietnam could fall soon after the country's central bank allowed the currency to fall faster and because of a lower price floor and ample supply from a harvest peak, traders said on Wednesday.
Vietnamese rice prices have fallen the most among producing nations in 2015, but the country's rice shipment has been lagging far behind last year due to growing competition from India, Thailand and Pakistan.
Vietnam's benchmark 5-percent broken rice widened this week to $340-$350 a tonne, free-on-board basis, from $340-$345 last Wednesday, while the 25-percent broken dropped to $320-$325 a tonne, from $320-$340 a week ago.
Vietnam doubled its trading band for interbank dollar/dong transactions on Wednesday, aiming to protect its exports by countering the adverse affects of a strengthening dollar and yuan devaluation, the central bank said.
Besides, from Friday, the price floor for Vietnam's 25 percent broken rice will be cut by 2.9 percent to $330 a tonne to encourage exports, the Vietnam Food Association has said.
"Many believe that Vietnamese rice prices have fallen to bottom, but with China's devaluation the bottom has now become expensive, so Vietnam will need to lower prices again," a dealer at an Asian trading firm in Ho Chi Minh City said.
Vietnam is the third-largest rice exporter after India and Thailand while China has been its biggest rice buyer in recent years.
China will buy 1 million tonnes of rice from Thailand, the Thai commerce minister said on Monday.
More supplies from the summer-autumn crop harvest now peaking in the Mekong Delta could also soften prices, traders said.
Vietnam's 5-percent broken rice price fell 10.5 percent in the January-July period from a year ago to $356 a tonne, FOB basis, the largest drop among three nations measured, the UN Food and Agriculture Organization (FAO) said in its August report.
Thailand's 5-percent broken rice fell 4.4 percent in the same period and Uruguay's similar grade had a 5.4 percent drop, the FAO report said.
Vietnam has exported 3.3 million tonnes of rice in the first seven months of 2015, down 8.8 percent from a year ago, based on the food association's data.