Vietnam and other major rice exporters are likely to enjoy higher demand and prices in the 2023-24 season, says the United Nations’ Food and Agricultural Organization.
In its half-yearly World Food Outlook report issued this month, the FAO forecasts world rice production to rise 1.3% year-on-year to 523.5 million tons in this season.
“The anticipated output increase mostly reflects positive incentives provided by generally higher producer prices, easing fertilizer costs and continuing government assistance measures,” the report says.
Asian production this season could end 1% above the last, but still fall short of the record high in 2021-2022, it adds.
It also notes that many uncertainties persist for secondary crops being currently planted along and south of the equator and for main crops being sown in the Northern Hemisphere.
“These uncertainties primarily surround weather conditions, given the high probability of an El Nino event emerging during the Northern Hemisphere summer and its association with reduced rainfall over parts of Southern and Southeastern Asia.”
Price rise
Rice prices have remained on an upward trajectory after rising for much of last year. The FAO All Rice Price Index climbed 7.5% from December to 127.8 points in May, its highest level since October 2011.
The price increases reflected both demand and supply factors, the report says.
“On the demand side, prices have drawn support from strong purchases by Asian buyers, often resulting from public efforts to keep domestic prices in check and/or to reconstitute reserves.”
Meanwhile, suppliers including Argentina, Brazil, Russia, the U.S. and especially Pakistan “are expected to see their 2023 rice exports hampered by supply tightness stemming from output reductions.”
On the other hand, “Australia, Cambodia, Guyana, Thailand and Vietnam are all seen counting on sufficient supplies to step-up shipments in 2023, or to keep them at overall high levels, as is expected to be the case in Paraguay and Uruguay.”
Record high stocks
With output forecast to surpass utilization, rice stocks are predicted to reach 198.3 million tons at the close of the marketing seasons, up 1.8% from a year earlier.
“This would be an all-time record high, being sufficient to cover 4.5 months of projected global consumption,” the FAO report says.
Rice exporting countries are expected to boost reserves 3.2% from a year earlier to 66.7 million tons. Stocks in Vietnam are expected to be little changed whereas Australia, Cambodia, Myanmar and Uruguay “may all need to draw on their reserves to meet expected consumption and export needs.”
Much of the increase in stocks could be attributed to India, the FAO report says, adding that output recoveries could also let Pakistan and the U.S. reconstitute their reserves. The report expects to see accumulation in Thailand.
Vietnam’s quality focus
Vietnam, the world’s third-largest rice exporter after India and Thailand, is seeking to boost quality to increase value and will cut its annual rice exports by 44% to four million tons by 2030. The changes are part of the country’s latest rice development strategy issued in late last month, which will be implemented until the end of the decade.
Vietnam shipped 7.1 million tons of rice overseas last year, a 10-year record high, generating revenues of $3.45 billion, up 5.1% year-on-year, according to government official data.
The strategy envisages Vietnam diversifying export markets to reduce its reliance on any particular country. By 2025, 60% of Vietnamese rice exports will be shipped to Asian markets, 22% to Africa, 7% to American markets, 4% to the Middle East, and 3% to Europe. By 2030, Asian and European markets will respectively account for 55% and 5% of Vietnam’s rice exports.
In the first five months of this year, Vietnam shipped 3.62 million tons of rice overseas, higher than the corresponding 2.77 million tons in 2022 and 2.59 million tons in 2021, according to the General Department of Customs.
Meanwhile, according to the Vietnam Food Association, the prices of several Vietnamese rice varieties are currently higher than that of similar types of Indian and Thai rice. The price of Vietnamese 5% broken rice reached $498/ton early this month, compared to $492 and $453 for Thailand and India, respectively.
On June 17, the Bangkok Post quoted Thailand’s Commerce Minister Jurin Laksanawisit as saying El Nino is likely to propel rice exports across the world as countries stock up while bracing for the effects caused by the ongoing weather phenomenon’s impacts.
He said the Philippines is expected to increase its rice purchases by 2-3 million tons, while Indonesia is expediting procurement of a substantial quantity from both Thailand and Vietnam.
He said the Philippines is expected to increase its rice purchases by 2-3 million tons, while Indonesia is expediting procurement of a substantial quantity of rice from both Thailand and Vietnam.
The Philippines has long been Vietnam’s biggest rice buyer, accounting for 45% of its rice shipments in 2022. Vietnam’s Prime Minister Pham Minh Chinh told Philippine President Ferdinand Marcos Jr at a regional meeting in Indonesia last month that Vietnam was willing to supply rice to the Philippines for the long term at reasonable prices.