Vietnam Rice: Prices to rise on new demand

By Ho Binh Minh

HANOI (Reuters) - Vietnam's rice export prices are expected to rise slightly in the rest of 2008, during the interval between crops, boosted by fresh demand from the Philippines and Africa, traders and the government said.

Vietnam projects rice exports this year of 4.5 million to 4.6 million tonnes, putting it on track to be the world's second-largest rice exporter, up from third place in 2007, after Thailand and India, when it shipped 4.5 million tonnes.

Domestic prices have already gained slightly this week in the Mekong Delta food basket, where farmers have finished harvesting a bumper summer-autumn crop.

"Prices are rising now after trading houses bought in about 200,000 tonnes recently," a state trader in Ho Chi Minh City said. Most of the recent purchases were for Africa, he said.

Third crop paddy edged up to 3,800-3,900 dong (23-23.6 U.S. cents) per kg on Wednesday in the Delta, from 3,700 dong late last week. Farmers in the Delta grow three crops a year.

"The Philippines may also arrive in the market soon for their import plans next year," the state trader added.

Traders in Vietnam and Singapore said they had not heard of any specific timing or quantity involved for the Philippines but a Vietnamese industry source, who declined to be identified, said talks with Vietnam might start in October.

"The Philippines may be now looking at delivery from January," the source told Reuters, but gave no figures.

Vietnam starts its next harvest of the highest-yielding winter-spring crop only from late February or March, so the grain for Manila would cut into its current stocks, giving prices a chance to rise, traders said.

"There is also a large gap between Vietnamese rice and Thai rice so Vietnamese rice prices have room to move up," the state trader said.

The price of Thai 5 percent broken rice stood unchanged on Wednesday at $700 per tonne, while Vietnam's 5 percent broken rice was quoted at $540-$550 a tonne, on a free-on-board basis.

EARNINGS NEARLY DOUBLE

Vietnam's rice exports are expected to have fallen 7.4 percent in the period between January and September, to 3.69 million tonnes, while its earnings will nearly double, the government said on Wednesday.

Asian rice prices have stabilized after tripling to their highest levels this year, pushing up Vietnam's revenue from the grain in the first nine months of the year by 89.7 percent, to $2.44 billion, the General Statistics Office report showed.

Rice is a staple food of many of Vietnam's 86.5 million people, and also the largest cash earner among its agriculture exports.