Asia Grain Outlook on Wednesday: Rice price still vulnerable to upside risk
Rice prices in Asia are still vulnerable to upside risk over the next several months, despite lower-than-expected prices offered by Vietnam in the latest Philippines tender, traders said Wednesday.
Rice prices will likely remain steady over the next two months, but after February, they will probably rise significantly, especially since Vietnam offered to sell so much to the Philippines, they said.
"By February or March, Vietnam may have sold out their stocks, and that will give a boost to prices," said a rice exporter in Thailand, the world's top exporter of the grain.
"And that is excluding any demand surprise from India. If they start to inquire, then prices are likely to shoot up," he added.
State-owned Vietnam Southern Food Corp., Vietnam's largest rice exporter offered US$664.90/tonne for all 600,000 metric tonnes the National Food Authority sought in the tender. This was US$50 below the second-lowest offer--for a portion of the total volume tendered.
Market participants expect Vietnam, Asia's second-largest rice exporter, to win the full tender in view of its competitive offer.
Based on the attractive price for such a large volume, one might assume that Vietnam's supply is comfortable, said a rice trader in Thailand, who added that if India, South Africa, or Iran come to the market early next year, free-on-board prices could be driven to the US$1,000/tonne level.
He and the Thai exporter agreed that prices probably won't test record levels--around US$1,100/tonne, FOB--seen in April 2008.
Market participants said cash prices in Asia will likely stay little changed, or even fall slightly, in coming days, as tender prices in the Philippines have been providing cues for the Asian cash market since the Philippines announced its tender plans about a month ago.
Meanwhile, some speculators have already started to stockpile in anticipation of cashing in early next year, said the trader in Thailand.
