Strong demand from top importing countries has led to a spurt in Asian rice prices, with the grain being quoted at its highest in nearly two and a half years in Vietnam and touching almost a year-high in Thailand, traders said on Thursday.
Vietnam's 5-percent broken rice RI-VNBKN5-P1 was quoted at a level unseen since December 2014, at $390 a tonne, FOB Saigon, up from $360-$380 last week, as suppliers looked forward to export deals, traders said.
However, trade in Vietnam was thin despite higher prices as traders and farmers hold on to stocks expecting a further jump in prices.
"People expect prices to rise to $400 and even more, so they don't want to sell now. Traders want to wait and see," said a trader based in Ho Chi Minh City.
Bangladesh said it will buy 250,000-300,000 tonnes of Vietnamese rice immediately and plans to increase rice imports from Vietnam to 500,000 tonnes by end-2017. It will also buy one million tonnes of Vietnamese rice annually until 2022.
Meanwhile, the Philippines also said it would issue a tender next month to import 250,000 tonnes of the grain from Thailand and Vietnam, and possibly also India.
Likewise, prices also jumped in Thailand and India, the world's first and second biggest rice exporters, respectively.
Thai benchmark 5-percent broken rice RI-THBKN5-P1 rose this week to $430 a tonne, free-on-board (FOB) Bangkok, from $411-$412 last week, the highest level in almost a year.
Thai prices have risen sharply since April, leading to a greater gap over prices in Vietnam, Thailand's main competitor, but traders said they have not yet lost buyers.
"The upward price trend continues normally as there is demand and purchases are made," a trader in Bangkok said, adding that ships were still coming in to load the grain.
Traders also said the price hike has started making the local grain too expensive for them to buy for export.
"Exporters have to be careful, because local prices are higher now than when deals were made, making us fulfill shipments at our own loss," another trader in Bangkok said, adding that some traders had shied away from fresh deals.
Thai prices are expected to stabilize in the next few weeks, traders said.
In India, the 5 percent broken parboiled rice RI-INBKN5-P1 jumped $15 per tonne to $413 to $416 on improvement in demand and following a rally in overseas prices.
"Export inquiries have risen in the past few days. Indian rice has become competitive as prices are rising in Thailand and Vietnam," said an exporter based in Kakinada in the southern state of Andhra Pradesh.
In the last few months Indian exports had slowed down due to an appreciating rupee and as local paddy prices rose, eroding the competitiveness of exporters.
The rupee has risen nearly 5 percent so far in 2017 and is trading near its highest level in 21 months. A strong rupee trims returns of exporters.
"At the current price level we can sign export deals. African buyers have stared purchases," said another exporter based in Kakinada.