Vietnamese 5% WR rice prices plunge to record low amid new crop supply glut

Vietnamese 5% broken white rice prices have slumped to a record low amid a supply glut as the new summer-autumn crop enters the market.

Market sources said buyers have been holding back on purchases until the peak harvest when better-quality grain is expected, leading to sluggish demand and putting further pressure on rice prices. Vietnam is the world's third-biggest rice exporter.

Platts, part of S&P Global Commodity Insights, assessed Vietnamese 5% broken WR at an all-time low of $374/mt FOB on June 26, down $5/mt week over week and $23/mt month over month. Platts assessed Vietnamese fragrant 5% broken rice at $468/mt FOB, the lowest since March 18, down $1/mt week over week and $51/mt month over month.

Harvesting of the summer-autumn crop began in May with limited early yields, raising concerns about grain quality and leading buyers to adopt a wait-and-see approach or seek alternative origins.

"Continuous rains have affected both yield and grain quality in the early harvest; however, the quality is expected to improve in the coming months as the harvest progresses," said an industry source.

The main harvest is expected to continue from June until late August. According to market sources, about 17% of the area had been harvested as of June 23.

"Buyers in the Philippines are currently preferring Myanmar and Thai 5% broken WR, as they are not satisfied with the quality of the Vietnamese crop yet," said a Vietnam-based trader. "But that is typical for this season; the grain quality usually improves as the harvest progresses."

Weak demand from key buyers, such as the Philippines, has contributed to a drop in export prices.

"The summer-autumn crop has just started, but demand from the Philippines is low as buyers await the peak harvest, so prices have dropped significantly," said a Vietnamese exporter. "Supply is currently outpacing demand, and farmers cannot stockpile paddy, so they must sell immediately after harvest, regardless of price."

Another Vietnamese exporter said that everyone has been anticipating a larger volume in July. "Still, prices will ultimately depend on demand. The summer-autumn crop will not be as abundant as the winter-spring crop."

Commodity Insights analysts expect Vietnam to export 8 million mt of rice in the 2024-25 marketing year (January-December), down 11.5% year over year.