This commercial transaction emphasizes on the currently limited supply within Asia, which may possibly raise the rice prices in 2021 and require traditional rice consumers to shift from Thailand and Vietnam market to India – the world’s biggest cereal exporter.
More specifically, Indian businessmen have signed export contract of up to 70,000 tons of 100% broken rice in January and February at a price of about USD 310 per ton. The shipping term used in this contract is FOB (Free On Board). Meanwhile, rice 5% broken manufactured in Vietnam is currently sold at USD 500 – USD 505 per ton, significantly higher compared with the price applied to “Made in India” rice (USA 381 – USD 387 per ton).
Rice imported from India is predominantly used to either produce animal feed or provide input for beer manufacturers. However, the recent months has witnessed a decrease in the supply source and an increase in the volume purchased by Philippines, both of which have resulted in a dramatic increase in the rice price to a record high level in the past 9 years. According to data collected from the General Statistics Office of Vietnam, Vietnam’s total rice output in 2020 has seen a decrease of 1.85% to 42.69 million tons, equivalent to about 21.35 million tons. The export volume of rice in 2020 is also estimated to decrease by 3.5%, to only 6.15 million tons.
A representative from AIREA shared that, the strong demand from other Asian and African countries has also influenced on India’s rice selling prices, which are, however, still highly competitive thanks to great supply. India predicted that Vietnam might import even more rice, as long as the price difference still occurs. In December 2020, the biggest rice exporter – China also began to import India rice for the first time after at least 3 decades. The temporary data from India Ministry of Commerce and Industry showed that in 2020, India enjoyed a record rice export volume of 14 million tons.
Translated by: Dandelion