USDA cuts Vietnam's 2020 rice output forecast by 3.3% on drought, salt water

London — The USDA on Wednesday lowered its forecast for Vietnam's 2020 paddy production to 43.8 million mt, down 3.3% from the previous estimate and leaving the harvest 0.9% lower for the year due to drought and salt water intrusion.

Production in 2021 is forecast to rise 0.4% to 44 million mt due to an expansion in harvested area to 7.56 million hectares (+0.67%), the USDA said in the report.

Despite the downward revision for the 2020 crop, winter/spring paddy production in the Mekong Delta is expected to increase 0.25% year-on-year to 11 million mt as adjustments in the planting calendar limited the impact of drought and salinity issues, according to the USDA. About 30,000 ha of paddy fields in coastal provinces were affected by drought, it said.

Water levels in the Mekong River are lower than average this year, causing concerns about salinity intrusion and inadequate sediment to supplement soil nutrition due to reduced freshwater from upstream. Lower than average rainfall is also forecast for H1 2020, although this is anticipated to improve from July, the USDA said. Despite concerns about inadequate water supplies over the next few months, paddy production in the Mekong Delta for the 2020 summer/autumn crop is expected to remain unchanged at 13.6 million mt from a year earlier. Please see the table below for a breakdown of production levels for the 2020 crop.

Consumption is forecast to remain unchanged at 21.4 million mt as COVID-19 household stockpiling offset declining per capita consumption in cities, the USDA said. Domestic prices rose in January ahead of the winter/spring harvest and due to steady demand from the Philippines, Malaysia and China. Paddy prices were also supported by reports of a delayed harvest due to cool weather. Exports in 2020 are forecast at 6.7 million mt (milled equivalent, +1.98%). Vietnam's Ministry of Industry and Trade has appealed an existing ban on the registration of new export contracts, which was implemented on 24 March by the prime minister. The ban is expected to last through May, according to the prime minister. Demand for Vietnamese rice is expected to climb due to anticipated reductions in Cambodian and Thai production, less competitive Indian prices, COVID-19 related stockpiling and the ongoing locust swarm in East Africa, according to the USDA. Ending stocks for 2020 are forecast to decline to 677,000 MTS (milled equivalent, -25.4%).