Vietnam rice hit its highest level in over a year this week on potential export deals and prices in Thailand firmed up as supply eased, while the Indian variety gained on growing demand from Africa, traders said.
Expectations of strong demand from top importing countries such as Bangladesh and the Philippines are fuelling the uptrend in Vietnam and Thailand rice prices.
Vietnam's 5-percent broken rice RI-VNBKN5-P1 was quoted at a level unseen since April last year, at $360-$380 a tonne, FOB Saigon, up from $365-$370 last week, as suppliers eyed export deals, traders said.
Bangladesh said on Tuesday it will buy 250,000-300,000 tonnes of Vietnamese rice immediately and planned to increase rice imports from Vietnam to 500,000 tonnes by end-2017.
It will also buy one million tonne of Vietnamese rice annually until 2022.
The Philippines said on Monday it would issue a tender next month to import 250,000 tonnes of the grain from key suppliers Thailand and Vietnam, and possibly also India.
Thai benchmark 5-percent broken rice RI-THBKN5-P1 firmed this week to $411-$412 a tonne, free-on-board (FOB) Bangkok, from $385-$411 last week, the highest in nine months.
"Prices have strengthened greatly, and supply is running low while demand remains constant," a trader in Bangkok said.
But traders in Thailand and Vietnam said the price hike has started making the local grain too expensive for them to buy for export, raising a possibility for short supply in the market.
"After the Bangladesh news, I can no longer buy anything," said a trader in Ho Chi Minh City.
"The market is really stressed already, even though there's no real trade," another trader said, referring to the Bangladesh deals.
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 RI-INBKN5-P1 jumped by $7 per tonne to $398-$403, on a slight improvement in demand and a rally in local paddy prices.
"Export prices are going up, tracking rise in other countries. Demand has also improved from African buyers," said M.Adishankar, executive director at Sri Lalitha, an exporter based at Kakinada in the southern state of Andhra Pradesh.
In the past two months, there has been a sharp rise in Indian rates on government buying and as appreciation in the rupee caused a rally in local paddy prices.
"Rising paddy price in the local market has been forcing us to raise export prices," said another exporter based in Kakinada.
Global rice prices are likely to go further up due to demand from Bangladesh, Dhaka-based traders and government officials said.
Earlier this month, Bangladesh's state grains buyer said the country will import 600,000 tonnes of rice.
Bangladesh, the world's fourth-biggest rice producer with around 34 million tonnes, could emerge as a major importer this year, as low stocks and soaring prices led the government to import the grain.