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MUMBAI / HANOI, January 4: Vietnam, the world’s third-largest rice exporter, has started buying the grain from rival India for the first time in decades after local prices rose to their highest level in nine years amid limited domestic supplies, they told Reuters. four industry officials.
The purchases highlight supply shortages in Asia, which could drive up rice prices in 2021 and even force traditional rice buyers from Thailand and Vietnam to switch to India, the world’s largest exporter of the grain.
Indian traders have been contracted to export 70,000 tonnes of 100% broken rice for January and February shipments at around $ 310 per tonne free on board (FOB), industry officials say.
“For the first time we are exporting to Vietnam,” Krishna Rao, president of the Association of Rice Exporters, told Reuters on Monday. “Indian prices are very attractive. The huge price difference makes exports possible. “
Declining supplies and continued Philippine purchases have pushed Vietnamese rice export prices to a new nine-year high.
5% broken rice from Vietnam
Declining supplies will raise concerns about food insecurity with sub-Saharan Africa among areas where import demand has been increasing due in part to population growth.
Chronic and acute hunger is on the rise, affecting vulnerable households in nearly all countries, with the COVID-19 pandemic reducing incomes and disrupting supply chains, according to the World Bank.
Gathering
Traders said the global pandemic has also led Vietnam and other countries to stockpile rice.
Vietnam announced last year that it would store 270,000 tonnes of rice to ensure food availability amid coronavirus-fueled supply chain disruptions around the world.
Traders in Vietnam said Indian rice had been stored in government reserves since 2016/17 and its relatively cheap price reflected low quality.
“The quality of the rice is so bad that it is not good for direct human consumption, but only for producing animal feed and beer,” said a Ho Chi Minh City-based rice trader.
Vietnam’s total paddy production in 2020 fell 1.85% to 42.69 million tonnes, which is equivalent to about 21.35 million tonnes of rice, preliminary data from the government’s General Statistics Office showed.
The country’s rice exports in 2020 are forecast to have fallen 3.5% to 6.15 million tonnes.
Strong demand from Asian and African countries has also been driving up prices from India, but they remain very competitive due to abundant stocks, said Nitin Gupta, vice president of Olam India’s rice business.
Vietnam could make more purchases as long as the price difference is maintained, Gupta said.
In December, China, the world’s largest rice importer, started buying Indian rice for the first time in at least three decades due to tight supplies from Thailand, Myanmar and Vietnam and a deep discount price offering.
In 2020, India exported a record 14 million tonnes of rice, provisional data from the Ministry of Commerce showed.
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