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Prices drop in major exporters on weak demand

Bangkok (Reuters) - Rice prices dropped this week in Thailand, Vietnam and India due to weak demand for the staple, traders said on Thursday.

A farmer spreads fertilizer in his rice field on the outskirts of Ahmedabad, India, August 30, 2016. REUTERS/Amit Dave/Files

Thai benchmark 5-percent broken rice was quoted at $370-$375 a tonne, free-on-board (FOB) Bangkok, down from $375-$377 a tonne last week.

The fall in prices can be attributed to the release of new crops.

“Export market demand is currently at a low level, perhaps due to buyers waiting to see whether a further slump in prices will occur or not,” said a Bangkok-based trader.

Prices in Thailand are expected to fall next week and remain relatively stable until the end of October, according to rice traders.

Vietnam benchmark 5-percent broken rice RI-VNBKN5-P1 tightened slightly to $385-$390 a tonne this week, FOB Saigon, from $385-$395 last week.

This drop has occurred as fresh demand was scarce after harvesting ended for the summer-autumn crops.

“The market has been quiet on low demand. Prices have declined in Thailand, so Vietnam’s prices also went down,” a trader in Ho Chi Minh City said.

Thailand and Vietnam are the world’s second and third biggest rice exporters.

In India, the world’s biggest rice exporter, 5-percent broken parboiled rice prices fell by $3 per tonne to $400 to $403 per tonne.

Weak demand is the result of a strong rupee which dents export margins.

“We are out priced. Buyers are asking for less than $400 per tonne, which is not possible due to strong rupee,” said an exporter based in Kakinada in the southern state of Andhra Pradesh.

India’s non-basmati rice exports are likely to slow over the next few months as its shipments of the grain have become too expensive due to a rally in the rupee and an increase in local paddy prices.

Meanwhile, Bangladesh is set to buy 250,000 tonnes of white rice at $453 a tonne from Cambodia in a government-to-government deal, officials said.

It had earlier imported 200,000 tonnes of white rice at $430 a tonne and 50,000 tonnes of parboiled rice at $470 a tonne from Vietnam in a state-to-state deal at rates much higher than in tenders.

Demand from Bangladesh has been crucial to rice prices in the global market this year as the country’s government is battling to build buffer stocks to combat high domestic prices after flash floods in April wiped away around 1 million tonnes of rice output.

Reporting by Mi Nguyen in Hanoi, Rajendra Jadhav in Mumbai, Ruma Paul in Dhaka and Suphanida Thakral in Bangkok; Editing by Vyas Mohan