In recent weeks, Vietnam has witnessed an extraordinary surge in the prices of rice, both in the domestic market and for export. The country has also officially achieved a historic high in rice exports after 34 years of participation in the global rice trade. Let’s delve into this remarkable turn of events and what it means for Vietnam’s rice industry.
Setting New Records
Vietnam Food Association (VFA) reveals that in the latest week (October 12-19), rice prices in the domestic market increased significantly, ranging from 193 to 604 Vietnamese dong per kilogram, depending on the variety.
During this period, the average purchasing price for regular rice in the fields reached 8,321 Vietnamese dong per kilogram, while warehouse prices stood at 9,475 Vietnamese dong per kilogram. High-quality white rice, grade 1, was priced at 15,288 Vietnamese dong per kilogram, 5% broken rice at 15,129 Vietnamese dong per kilogram, 15% broken rice at 14,858 Vietnamese dong per kilogram, and 25% broken rice at 14,533 Vietnamese dong per kilogram.
Vietnamese rice export prices also surged, counter to the trend of other competitive players in the global market. Specifically, on October 23, Vietnam’s 5% and 25% broken rice were priced at 643 USD per ton and 628 USD per ton, respectively.
Comparatively, Vietnam’s 5% broken rice is 74 USD per ton more expensive than the same grade of rice from Thailand and 80 USD per ton more than rice from Pakistan. Meanwhile, Vietnam’s 25% broken rice is 105 USD per ton more expensive than Thai rice and 145 USD per ton more expensive than Pakistani rice.
When compared to major rice-exporting countries worldwide, Vietnam’s rice is currently commanding the highest prices.
According to Mr. Đỗ Hà Nam, Vice Chairman of VFA, the highest price for rice used to be 12,900 Vietnamese dong per kilogram. Presently, it has surged to around 13,500-13,600 Vietnamese dong per kilogram. The price for finished rice stands at 16,100-16,200 Vietnamese dong per kilogram, pushing export prices to nearly 700 USD per ton – an all-time high in Vietnam’s rice export history.
Preliminary statistics from the General Department of Customs indicate that, as of October 15, Vietnam has exported nearly 6.73 million tons of rice, earning over 3.73 billion USD. This represents a 17% increase in volume and a substantial 34.5% surge in value compared to the same period last year.
With these figures, Vietnam’s rice export turnover has exceeded the 3.65 billion USD mark set in 2011, officially establishing a new historical record after 34 years of participating in the global rice market.
A Tight Market with Strong Demand
Despite the domestic rice market entering the final stages of the harvest season, the supply is dwindling, but prices continue to rise dramatically.
“Enterprises are having to purchase paddy in the fields at prices ranging from 8,000 to 8,200 Vietnamese dong per kilogram, the highest purchase price to date,” says Mr. Phạm Thái Bình, Chairman of the Board of Directors of Trung An High-tech Agriculture Joint Stock Company.
He also mentions that contracts for rice exports have been signed at record levels of 670-680 USD per ton.
Mr. Bình observes that the supply of rice for export from Vietnam to the end of the year is limited, while global market demand remains high, particularly from Indonesia, the Philippines, and China. For example, Indonesia has decided to purchase an additional 1.5 million tons of rice, focusing on sourcing from Vietnam and Thailand. The Philippines has removed its price cap on rice, reinvigorating the country’s rice import and export activities. These factors are significantly affecting the export prices of Vietnamese rice, as these are traditional export markets for the country.
Regarding rice export prices, Mr. Bình believes they will remain high and are likely to remain above the 600 USD per ton threshold, even after the Spring harvest in early 2024.
Experts in the industry believe that Vietnam has a favorable position for rice exports. However, companies must have strategies to ensure effective exports, especially when rice prices are as high as they are now.
Increasing the volume of rice exports amid high prices has greatly improved the incomes of all sectors in the rice supply chain. However, Mr. Nguyễn Văn Việt, head of the Planning Department (Ministry of Agriculture and Rural Development), recommends that businesses should carefully consider and plan to ensure that rice exports benefit both the people and businesses, not only in the short term but also sustainably for the future.