Vietnam to stockpile rice to boost prices
HANOI - Vietnam plans to stockpile the equivalent of 3 percent of projected exports this year in a bid to boost prices, grain traders said on Monday.
They said the government of Vietnam, the world number two rice exporter behind Thailand, has allowed its top grain trading firms to obtain soft loans to stockpile 150,000 tonnes of winter-spring rice from farmers whose harvest is reaching a peak.
Traders said the relatively small volume involved would limit the price impact. Vietnam has set a 5 million tonne limit on 2006 rice export prices. It exported 5.2 million tonnes in 2005.
State-run Southern Food Corporation (Vinafood 2) was allowed to get collateral-free loans to stock 100,000 tonnes and the Northern Food Corporation (Vinafood 1) would stockpile 50,000 tonnes, grain traders in Ho Chi Minh City said.
Traders gave no details of the loans, but said it would cost nearly $34 million to build the stock to prevent prices from falling.
A kilogramme of husked rice now costs 3,600 dong ($0.226) in the Mekong Delta rice basket. The price of unhusked grain has eased to 2,300 dong ($0.145) per kg from 2,500 dong for a similar crop a year ago.
State-run Voice of Vietnam radio said on Monday the six-month loans would come from the Finance Ministry-run Development Assistance Fund.
Harvesting of the Mekong Delta's winter-spring crop has been completed on about 70 percent of the planted area. The crop, Vietnam's highest yielding, produces the best quality grain.
A rice dealer said Vinafood 1, which is based in Hanoi in the country's north, was expected to complete its purchase in the southern region incorporating the Mekong Delta.
Traders said foreign buyers expected prices to fall further in the remaining days of March with ample supplies coming in, so they have not rushed to sign deals in recent weeks.
"Exporters have asked the government to obtain loans to buy in 500,000 tonnes of paddy," said a trader in Ho Chi Minh City, Vietnam's largest grain trading market.
The 150,000 tonnes of husked rice to be stockpiled is equivalent to 300,000 tonnes of paddy rice. The Agriculture Ministry expects the Delta's winter-spring crop output to edge up 3 percent to 9 million tonnes of paddy.
"Rice prices are now likely to firm, but the point is will they stay firm for how long," the trader said.
Paddy prices in the Mekong Delta stabilised over the past week after Vietnam loaded a huge volume to the Philippines, a key regional buyer. A kilogram sells for 2,300 dong ($0.145), from a range of 2,000-2,380 dong last week.
The Vietnam Food Association estimated 1.1 million tonnes of rice would be exported in the first quarter of this year, slightly higher than a shipment of 1.05 million tonnes in the same period last year.
Vinafood 1 and Vinafood 2, which await government approval for their merger aimed at boosting competitiveness, account for 65-70 percent of the country's total rice export earnings each year, the official Vietnam News Agency said. ($1=15,900 dong)
Reuters - March 27, 2006.
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