Rice Prices Climb Across Asia: India, Vietnam and Thailand All See Increases

Rice prices have risen in Asia's major rice-exporting countries. Supply shortages in domestic markets, a stronger Indian rupee, concerns over production and expectations of higher demand have combined to push prices upward across the region.

In India, the world's largest rice exporter, prices have climbed for two consecutive weeks. Last week, 5 percent broken parboiled rice traded at $387 to $392 per tonne, up from $384 to $389 the week before. The price of 5 percent broken raw rice also rose to $389 to $394 per tonne; two weeks earlier it had been $385 to $390.

Those involved in the trade attribute India's price rise to the rupee's strong position and a domestic supply shortfall. According to a Kolkata-based exporter, low paddy supply in the market has pushed rice prices upward.

Below-normal rainfall has also reduced production in several states. Industry officials fear India's rice output could fall this year for the first time in nearly a decade, and that the scale of the decline could be the largest in about 20 years. Insufficient rain as the crop ripened has raised fears of lower yields.

In Vietnam, rice prices have also risen to their highest level in nearly two months. Last Thursday, 5 percent broken rice sold at $440 to $450 per tonne there, compared with $420 to $430 two weeks earlier. It is the highest price since 21 August.

Traders hope the Philippines may resume importing rice from Vietnam starting in November. That could further increase demand in Vietnam's export market and keep upward pressure on prices.

An official of Vietnam's agriculture ministry said the country's rice exports will remain under pressure for the rest of the year, though this year's export target of 8 million tonnes is expected to be met. According to government customs data, Vietnam exported 228,871 tonnes of rice in the first half of October, taking total exports this year to 6.6 million tonnes.

The upward trend continues in Thailand as well. The price of 5 percent broken rice there has risen to $480 per tonne, up from $465 to $468 two weeks earlier.

Behind Thailand's increase are a growing number of ships at ports to load rice and additional buying by exporters. With the off-season harvest drawing to a close, traders are trying to build up stocks. At the same time, floods have disrupted paddy harvesting and rice collection, putting pressure on supply.

However, increased competition and reduced demand from major buyers have cast doubt on whether Thailand will meet this year's rice export target. The country's rice exporters' association fears the target of 7 million tonnes of exports this year may not be achieved.

All told, production worries in India, potential export demand for Vietnam and the supply squeeze in Thailand are keeping Asian rice prices on an upward path. Market participants believe this trend could create added pressure in the coming days for rice-importing countries.