Asia Grain Outlook on Wednesday: Rice prices set to rise again; low output

 

 

The higher-than-expected price offers at the Philippine rice tender Tuesday indicated Asian prices are set to rise again on the back of major output reductions in some of the world's biggest producers.

 

Market participants were hesitant to relate the current situation with the price surge in 2008, but an industry official said Wednesday the actual supply-demand situation could be worse this time.

 

"Actually, the fundamentals look to be even worse than 2008," Vietnam Food Association General Secretary Huynh Minh Hue said. Vietnam is the world's second-largest rice exporter.

 

Higher local prices in Vietnam indicate the country had already been affected by rising global prices following major output losses in the Philippines and India, he added.

 

Truong Thanh Phong, chairman of the association, told a local news agency Tuesday rice prices will likely gain 50% next year, as even Africa has sought to buy more from Vietnam.

 

State-owned Vietnam Southern Food Corp. 2, or Vinafood, offered the lowest price in Tuesday's tender but that was still 26% higher than the average contract price of the National Food Authority's purchase of 250,000 metric tonnes in early November.

 

The sharply higher prices offered to the world's top rice buyer will probably cut the amount the Philippines will eventually buy, given the limited budget and the country's intention to keep prices down in upcoming tenders, traders said.

 

Market participants said the country chose to act early this time to maintain supply and price stability.

 

In Thailand, the world's top rice exporter, the price of the benchmark 100% B white rice was quoted at US$606/tonne, up 16% from US$520 since Manila announced its tender plan in mid-October.

 

Meanwhile, India is set to become a net rice importer for the first time in two decades.

 

It plans to buy at least 2 million tonnes over the next year starting this month to bridge the shortfall.