Global price slump sends Vietnam on rice buying spree

Vietnam has been buying rice incessantly amid a global price slump following India's removal of export restrictions(opens in a new tab), market sources said Nov. 7.

Continued purchases by the Southeast Asian country, one of the world's biggest rice exporters, would give some reprieve to the rapidly sliding paddy prices in the region, market sources said.

India's reentry into the global rice market(opens in a new tab) fueled Vietnam's voracious appetite for paddy as global prices crashed.

Platts assessed India PB 5% STX at $432/mt Nov. 7, down 10% on the year, while Pakistan PB 5% STX was assessed at $487/mt, 16.6% lower year on year, S&P Global Commodity Insights data showed.

"In Vietnam, imported rice quality and usage can be an important factor," said Leocadio Sebastian, former agriculture undersecretary in the Philippines.

"Vietnam is leveraging lower-priced, lower-quality rice for domestic usage, with India as a primary source due to its ability to offer competitive pricing and volume, especially following the lifting of the export ban."

"Additionally, Cambodia contributes to Vietnam's rice supply as paddy often crosses the border to be processed domestically," Leocadio said.

Platts assessed India 5% Broken at $456/mt Nov. 7, compared with Vietnam 5% Broken at $509/mt, Commodity Insights data showed.

Indian rice, particularly Swarna, is a significant variety for Vietnamese people, and demand is rising for IR64 -- a variety that was previously imported in smaller volumes but is expected to see substantial increases this year, said a Vietnam-based exporter.

Inclement weather has also played its part in forcing Vietnam to import sizable volumes of rice.

"Due to crop damage from recent typhoons, Vietnam is importing rice from India, which is cost-effective," another Vietnam-based exporter said. In addition, Vietnamese rice traders are blending imported Cambodian paddy with local varieties for both domestic consumption and export markets, he said.

Typically, Vietnam uses cheaper broken rice from India and other origins for making noodles, snacks and animal feed.

The rapidly depleting rice stock in Vietnam is another factor leading it to purchase the grain from other origins, such as Cambodia and Myanmar.

"With domestic prices remaining relatively high amid tight supply, especially for lower grades, Vietnam is turning to cheaper Indian rice varieties," a Vietnam-based trader said.

As Commodity Insights rice reports show, Vietnamese grades have been costly throughout the year, prompting imports of broken or more affordable medium-grain options, mainly from India and occasionally from Myanmar, he said.

"Cambodia also supplies around 500,000 mt of paddy through cross-border trade annually, a typical volume for Vietnam," he added.

According to preliminary statistics from the General Department of Customs, in the first 10 months of 2024 so far, Vietnam spent nearly $1.2 billion to import rice, up 72.9% over the same period last year.

The US Department of Agriculture projected Vietnam's rice imports in the marketing year 2024-25 (September-August) at 2.95 million mt, an all-time high, making it the second-largest importer in the world after the Philippines.

Vietnam's rice trade flourishes

It's not just Vietnam's rice imports grabbing all the attention. The country's rice exports have surged as well.

Between January and October, Vietnam shipped out 7.8 million mt of rice, up 23.4% on the year, according to the General Department of Customs.

At this rate of shipment, the Southeast Asian country's rice exports are likely to touch 8.5 million mt in the calendar year 2024, which would be a record, a market source said.