Vietnam, the world’s third-largest rice exporter, has begun buying grain from rival India for the first time in decades, four industry officials told Reuters, after local prices soared to their peak in nine years amid limited domestic supplies.
The purchases illustrate the tightening of supplies in Asia, which could increase rice prices in 2021 and even push conventional Thai and Vietnamese purchasers of rice to turn to India, the world’s largest grain exporter.
Indian traders have been contracted to export 70,000 tons of 100 percent broken rice on a free-on-board (FOB) basis for shipments in January and February at about $310 per tonne, industry officials say.
We’re exporting to Vietnam for the first time,”For the first time we are exporting to Vietnam,” “Indian prices are very attractive. The huge price difference is making exports possible.”
Vietnamese rice export prices have been boosted to a new nine-year high by declining stocks and continued Philippine purchases.
Around $500-$505 per tonne of Vietnam’s 5 percent broken rice is offered, significantly higher compared to Indian prices of $381-$387.
Shrinking stocks would raise concerns about food insecurity in sub-Saharan Africa in areas where demand for imports has risen due in part to population growth.
According to the World Bank, chronic and acute hunger is on the rise, affecting vulnerable households in almost every country, with the pandemic of COVID-19 reducing incomes and disrupting supply chains.
Traders said Vietnam and other countries have also been prompted to stockpile rice by the global pandemic.
In order to ensure food security in the midst of coronavirus-driven supply chain disturbances worldwide, Vietnam declared last year that it will stockpile 270,000 tonnes of rice.
Traders in Vietnam said India’s rice had been stockpiled in government reserves since 2016/17 and reflected low quality in its relatively cheap price.
“The rice quality is so poor that it is not great for direct consumption for humans, and only for producing animal feeds and beer,” the Ho Chi Minh City-based rice trader said.
Total paddy production in Vietnam fell 1.85 percent to 42.69 million tonnes in 2020, equivalent to about 21.35 million tonnes of rice, preliminary data from the General Statistics Office of the Government showed.
The country’s rice exports are estimated to have fallen by 3.5% to 6.15 million tonnes in 2020.
Robust demand from Asian and African nations has also been raising Indian prices, but due to large stocks, they are still very competitive, said Nitin Gupta, vice president of the rice company of Olam India.
As long as the price distinction remains, Vietnam might make more purchases, Gupta said.
In December, for the first time in at least three decades, China, the world’s largest rice importer, began buying Indian rice due to tightening supplies from Thailand, Myanmar and Vietnam and the offer of sharply discounted rates.
India exported a record 14 million tons of rice in 2020, as shown by provisional data from the Trade Ministry.