VietNamNet Bridge – The information that the Vietnam Food Association (VFA) has been assigned by the government to buy one million tons of the summer-autumn crop for storage from the second half of July has helped raise the rice prices.
Despite the downward trend in the international rice market, the rice price in the domestic market has increased. However, it’s still too early to say if this is powerful enough to smelt the iceberg on the rice market.
Rice prices on the rise
After the one-month rice price decrease, the price has bounced back again in Mekong Delta. Small merchants at Ba Dac food wholesale market in Cai Be district of Tien Giang province said they now pay 4300 dong per kilo for IR 504 04 rice, 5000 dong per kilo for dried rice. The prices represent a 250-300 dong per kilo in comparison with the same period of June.
The small merchants at the Ba Dac market and in some districts have whispered in each other’s ears that the information about VFA preparing for a big campaign of collecting rice from farmers to store has pushed the prices up.
“We have heard that VFA would buy one million tons of rice for storage. Therefore, we spend money to buy rice from farmers for reselling later to VFA, when the rice collection campaign begins,” said Nguyen Thanh Hon, a merchant in Cai Lay district in Tien Giang province.
However, though the harvested rice price has bounced back, the prices of husked rice materials and finished products have been stable. The price of IR 50404 material price, for example, has been hovering around 6650-6700 dong per kilo, while long grain rice has been traded at 6800 dong for the last many days.
As for finished products, IR 50404 is being traded at 7800 dong per kilo, while long grain rice products at 8000 dong per kilo.
The rice iceberg thawing?
It’s clear that the move by VFA to collect one million tons of summer-autumn crop rice from farmers has helped warm up the market. However, experts do not think this would help thaw the rice iceberg which has been taking shape since the beginning of the year.
The domestic rice price has always been defined by the export price. If the demand in the world market is low, Vietnamese farmers would not be able to make high profits.
However, Pham Quang Dieu, Director of Agromonitor, a market analysis company, has affirmed that collecting rice from farmers now is a necessary thing. If enterprises do not receive the support to collect rice, the prices would drop more dramatically.
A rice exporter has also said that companies still have big stocks of winter-spring crop rice. Therefore, if they cannot borrow preferential loans, they would not dare to buy rice now.
“It is a right decision to spend money to collect rice now. But it’s necessary to clarify why to buy one million tons, not to buy more?” Dieu said.
Vietnam’s rice export has been going slowly, while the export price has decreased. Five percent broken rice is exported at 410 dollars per ton, while 25 percent broken rice at 370 dollars, which are lower by 20-50 dollars per ton than Indian and Pakistani export prices.
The merchants at the Ba Dac rice market also said they cannot see any signs of the sharp rice price increase in the time to come.