Vietnam fragrant 5% rice prices fall to record low amid weak demand, ample supply

Vietnamese fragrant 5% rice prices have fallen to their lowest level since Platts began assessing the variety 14 years ago, as weak demand from major buyers like the Philippines and Africa and abundant supplies continue to weigh heavily on the market, market sources told Platts March 17.

The decline reflects mounting supply pressure from the ongoing main-crop harvest and sluggish buying interest from key destinations, adding further downside risk to Vietnamese fragrant rice prices in the near term.

Platts, part of S&P Global Energy, assessed Vietnam Fragrant 5% rice at $399/mt FOB on March 17, down $11/mt week over week, $14/mt month over month and $62/mt year over year. It is the lowest price recorded since Platts launched the assessment on May 27, 2011.

A market participant said about 35% of Vietnam's winter/spring crop, its main crop, has been harvested, while the other two crops are the summer/autumn and autumn/winter crops.

"The market is currently experiencing a mixed dynamic. ... Buying interest remains relatively weak, as many buyers are still cautious and delaying their purchasing decisions," a Vietnam-based seller said, adding that some sellers are offering lower prices to secure contracts and maintain cash flow.

"The decline in DT8 prices is mainly due to weak demand, particularly concerns over reduced buying interest from Africa amid the ongoing Middle East conflict," said a Ho Chi Minh City-based exporter. The exporter said prices could fall as low as $380/mt FOB, noting that at such levels, exporters would likely blend more OM 5451 rice with DT8 to maintain margins, as pure DT8 at $380/mt would not cover production costs.

However, not all market participants expect prices to fall further, with some suggesting the market may be nearing a bottom.

A third Ho Chi Minh City-based exporter attributed the drop to selling pressure during the peak of the harvest season, adding that the price of DT8 cannot go any lower.

With the winter/spring harvest expected to peak through April, market participants said prices will likely remain pressured in the near term, though support could emerge if demand from key destinations improves or if exporters resist selling below production costs.