By Van Nguyen and Luzi Ann Javier
Nov. 30 (Bloomberg) — Rice prices may climb about 50 percent next year as demand surges, according to a food official in Vietnam, the world’s second-biggest exporter.
Import demand is increasing after typhoons and drought damaged crops in the Philippines and India, said Truong Thanh Phong, chairman of the Vietnam Food Association. Africa is also seeking more rice from Vietnam, he said.
“World prices may rise to about $800 a ton by the end of the second quarter next year but will not reach the highs of 2008,” Phong said in an interview yesterday in Hau Giang province in the Mekong delta, the biggest rice-growing region.
The export price of Thai rice, the Asian benchmark, and rice futures traded in Chicago advanced to records in the second quarter of 2008 as concerns over shortages prompted countries like Vietnam and India to curb exports, sparking food price riots across the globe.
The export price of Vietnamese 5 percent broken rice is now about $520 a metric ton, Phong said. That compares with $559 a ton for the same grade of Thai rice, and $590 a ton for the benchmark 100 percent grade-B Thai white rice.
Chicago rice futures have gained 38 percent from this year’s low of $11.195 per 100 pounds in March and traded 0.3 higher at $15.45 at 2:10 p.m. in Singapore. The price reached a record $25.07 in April 2008.
Driving Prices
The Philippines, the world’s biggest buyer, has scheduled tenders for 2.05 million tons of rice for 2010 supplies after storms destroyed 1.3 million tons of crops. Total imports next year may be a record 3 million tons in a “worst case scenario,” National Food Authority spokesman Rex Estoperez said on Nov. 23. That’s about 10 percent of the U.S. Department of Agriculture’s estimated global trade volume of 29.5 million tons for 2010.
Farmers and traders in Thailand are holding off sales of the grain in large volumes on expectations the first of three record 600,000-ton Philippine tenders, to be held tomorrow, will help drive prices higher, Rakesh Singh, a rice trader at Emmsons International Ltd. in New Delhi, said today.
“They’re waiting for prices to stabilize before they start offering” the grain, Singh said in a phone interview. “They expect market prices will increase to $800 a ton.”
The Thai price may soar to last year’s record of $1,038 a ton, according to the highest estimate in a survey this month of 10 importers, exporters and analysts in Vietnam, Thailand, India, Singapore and Pakistan. The median estimate was $700 and the lowest $600.
Production Lagging
Global rice production has lagged behind demand in four of the past eight years, and rising consumption is expected to erode global stockpiles by 41 percent to 85.9 million tons in the 2009-2010 marketing year, down from a record 146.7 million tons in 2001-2002, according to the USDA.
Vietnam may ship as much as 6 million tons next year, according to Phong of the Ho Chi Minh City-based Vietnam Food Association, which describes itself as an organization of 113 companies involved in “processing and trading food and agricultural products.” The country will have about 1.8 million tons from this year’s stockpile and a new harvest available for shipment in the first quarter of 2010, he said.
Vietnam expects rice exports this year to be a record 6 million to 6.2 million tons, exceeding the previous all-time high by up to 20 percent, Minister of Industry and Trade Vu Huy Hoang told the National Assembly in Hanoi on Nov. 18.
The Southeast Asian nation shipped 4.65 million tons last year and 5.17 million tons, the previous record, in 2005, according to the General Statistics Office in Hanoi.
Slumping Value
Still, slumping prices meant the value of Vietnamese rice exports dropped 6 percent in the 11 months through November to $2.56 billion, even as shipments increased, the Statistics Office reported on Nov. 26. Rice was Vietnam’s sixth-biggest export by value in the first 11 months of the year.
The government is trying to boost rice exports to meet the country’s economic growth targets, Deputy Minister of Industry and Trade Nguyen Thanh Bien said at a rice conference in Hau Giang yesterday. Foreign-currency receipts from exports will ease a dollar shortage in the country, he said.
To contact the reporters on this story: Van Nguyen in Ho Chi Minh City at vnguyen23@bloomberg.net; Luzi Ann Javier in Singapore at ljavier@bloomberg.net
Bloomberg News
Last Updated: November 30, 2009 03:23 EST