Rice exporters cancel contracts
Rice exporters cancel contracts
The increase in domestic rice prices since June 2013 is one of the major reasons for the recent rash of cancellations of export contracts.
According to Thoi Bao Kinh Te Sai Gon (Sai Gon Economic Times) news magazine, the volume of rice involved in the cancelled contracts was nearly one million tonnes.
Exporters said export prices picked up at a slower pace than domestic rates, leading to potential losses on contracts signed earlier when prices were low. The penalties for cancelling contracts are less than the potential losses, so rice exporters are willing to go down that path and pay the penalties, one export firm explained.
Lam Tuan Anh, director of the Ben Tre-based Thinh Phat Food Company, said Thailand had sold more than 100,000 tonnes of 5 per cent broken rice at $440 per tonne, making it hard for Vietnamese companies to sell at $410. So the FOB price of 5 per cent broken rice fell to $405 on Monday.
The general director of Docimexco in Dong Thap, Le Truong Son, told the Sai Gon Economic Times that China entered the harvest season in August, leading to lower demand for rice imports there.
Vietnamese exporters are awaiting the return to the market of traditional importers like Indonesia and the Philippines.
Domestic rice prices are hardening, but farmers do not benefit since most of them have already sold their stocks.
Foreign institutions forecast Vietnamese rice prices to continue to rise. But the VFA noted that globally supply is higher than demand, with India and Thailand likely to liquidate their inventories, posing a challenge to Vietnamese exports.
According to the Southern Plant Protection Centre, by early August farmers had harvested 1.1 million hectares of the 1.68 million hectares of land in the Mekong Delta under the summer-autumn crop.
vietnamnews
