Export prices of rice from Vietnam climbed to a two-and-a-half-month high on Thursday as rising domestic demand drove up procurement costs, while heavy rainfall in key Indian paddy-growing states raised concerns of a hit to crops in the country.
Vietnam's 5% broken rice rose to a range of $425-$430 per tonne, its highest since mid July, from $415-$420 a week earlier.
Domestic demand is picking up as the government is buying rice from farmers to top up national reserves, translating into higher domestic rates, traders said.
Export activity, however, remains subdued, they added.
Rice exports from Vietnam in the first nine months of this year fell 9.5% from a year earlier to 4.5 million tonnes, according to government data. Exports in September are forecast to be at 530,000 tonnes.
Indian rice export prices edged lower weighed by a weaker rupee, although heavy rainfall in the country raised concerns over the production of the staple crop.
Top exporter India's 5% broken parboiled variety eased to a $358 to $363 per tonne range from $360 to $365 last week.
"The eastern and southern states have been receiving heavy rainfall for the past few days. This could damage early sown paddy crop," said an exporter based at Kakinada, Andhra Pradesh.
Meanwhile, Thailand's 5% broken rice variety was quoted at $385 to $386 per tonne, compared to $380 to $386 last week.
Traders said demand has slightly improved but the expensive cost of shipping remains an obstacle for exports.
"Many deals have been put off due to the high cost of shipping," one trader said.
In Bangladesh, domestic prices of rice stayed high despite record summer crops and hefty imports.
Bangladesh, which is traditionally the world's third-biggest rice producer, has emerged as a big importer of rice due to depleted stocks and record local prices after repeated flooding ravaged its crop last year.