Thai and Vietnamese exporters renegotiate 500,000 tons of rice deals.

Thai and Vietnamese exporters renegotiate 500,000 tons of rice deals.

Rice Exporters in Thailand and Vietnam Renegotiating Prices Amidst Global Supply Tightening

Rice

Rice exporters in Thailand and Vietnam have found themselves in a precarious situation, desperately renegotiating prices on sales contracts for around half a million metric tons for August shipments. This urgency has arisen due to India’s recent ban on rice exports, which has caused a tightening of global supplies.

As a result, exporters are scrambling to secure rice supplies from farmers who have hiked prices following a surge in the world market. This sudden change has put millions of dollars worth of deals at risk, with both rice farmers and exporters taking advantage of the tightening global supplies. While farmers and exporters who had already purchased shipments in advance stand to benefit from the situation, buyers may lose out as sellers now seek to renegotiate contracts and demand higher prices.

In this precarious situation, rice importers find themselves with no choice but to pay the higher rates demanded by sellers, as the alternative is defaulting on contracts. The substantial increase in rice prices has left them with little bargaining power. India’s ban on white rice exports has further heightened food supply worries among rice importers in Asia and Africa.

“The prices have gone up since India banned exports and it is difficult for suppliers to fulfill contracts signed at lower prices,” said a Singapore-based trader with direct knowledge of the talks.

Thailand and Vietnam, respectively the world’s second and third-largest rice exporters, are estimated to ship more than one million metric tons of rice in August alone. With India being the largest rice exporter, accounting for roughly 40% of global supplies, the ban has caused a ripple effect on the market.

The global prices of key rice varieties shipped worldwide have already seen a significant increase of around $80 per metric ton since India’s export ban was imposed on July 20. For instance, Thailand’s 5% broken rice prices have climbed to $625 per metric ton from $545, as compared to two weeks ago. Similarly, the same variety from Vietnam has risen to $590 per metric ton compared to its previous range of $515-$525.

“The current prices are way higher than the contracted prices,” said a trader in Ho Chi Minh City. “The export price surge has resulted in a sharp rise in domestic paddy prices. Several traders are now rushing to sped up their purchases from farmers.”

While larger exporting houses are expected to fulfill their contracts, smaller trading companies might default on their shipments, causing further disruption in the market. To mitigate this crisis, importers, including the Philippines, are likely to seek direct deals with the governments of exporting countries to ensure critical food supplies.

In fact, the Philippines has already taken steps to boost its inventory of rice, including imports, with the government encouraging private traders to increase their purchases. A senior agriculture official confirmed this on Tuesday, emphasizing the importance of securing food supplies during these uncertain times.

In conclusion, the global rice market is facing significant challenges due to India’s ban on rice exports. Rice exporters in Thailand and Vietnam are forced to renegotiate prices amidst the tightening global supply. While farmers and exporters stand to gain from higher prices, buyers are left with little choice but to pay the inflated rates. This situation has led to concerns about food supply and has prompted importers to seek direct deals with the governments of exporting countries. In response, countries like the Philippines are taking proactive measures to boost their rice inventory and ensure a stable food supply for their citizens.