Rice price falls after Vietnam wins Philippine contract

Farmers carry a bag of paddy (unhusked rice) at their farm in Tien Giang Province – PHOTO: TRUNG CHANH

CAN THO – The rice price in many parts of the Mekong Delta region has dipped since Vietnam recently won a contract to supply 150,000 tons of rice to the Philippines.

Some rice suppliers of unprocessed rice for export enterprises in Can Tho City and Dong Thap Province said the current buying price for IR 50404 rice is VND6,050-6,150 per kilogram, down around VND50 against the level recorded shortly after Vietnam’s winning the rice contract at a tender in the Philippines on June 5, and down VND100-150 against around 10 days ago.

Nguyen Thanh Tho, a rice trader at Ba Dac Wholesale Market in Tien Giang Province’s Cai Be District, told the Daily that a kilogram of IR 50404 rice is now sold at VND6,100-6,200, falling VND50.

The price of fresh IR 50404 paddy has dropped to VND4,100-4,150 per kilogram from VND4,250-4,300 days ago.

Explaining the declining rice and paddy prices, Lam Anh Tuan, director of Thinh Phat Co. Ltd., a member of the Vietnam Food Association (VFA), said rice exports via official channels to major markets have turned difficult while small rice export shipments to China have stagnated due to the northern neighbor’s border closure.

According to rice expert Nguyen Dinh Bich, rice exports will have to cope with more challenges as Thailand is facing higher pressure to reduce its huge rice inventories estimated at up to 11 million tons.

Many rice exporting countries have offered lower prices as demanded by importers.

Vietnam won the contract to sell 150,000 tons of 25% broken rice to the Philippines after it agreed to cut its bid to US$410.12 per ton from US$419.35.

The director of a major rice export company in the Mekong Delta region, who asked not to be named, said the winning bid of US$410.12 means the FOB price at Vietnam port is only US$340-350.

According to the director, the contract to sell 300,000 tons of rice to the Philippines Vietnam won on February 28 consisted of 150,000 tons priced at US$441 and 150,000 tons at US$421. However, when his company was assigned to export rice as part of the contract, the FOB price was around US$350.

“Therefore, with the new contract, the FOB price of rice cannot be high,” he said.

Rice export enterprises currently buy IR 50404 rice at VND7,000-7,100 per kilogram, equivalent to US$322-327 per ton. So the differential between the buying price and the FOB price is just US$25 per ton.

Trung Chanh (The Saigon Times)