Indonesia increases purchases again, can Vietnamese rice reach a new peak?

On October 24, the Indonesian National Logistics Agency (Bulog) issued a notice inviting bids to import 550,000 tons of 5% broken rice (of which 250,000 tons are from Thailand and 300,000 tons are from Vietnam, Pakistan, Myanmar and Cambodia).

Indonesia has just invited bids to import 550,000 tons of 5% broken rice, of which 250,000 tons will come from Thailand and 300,000 tons will come from Vietnam, Pakistan... (Source: Nguoi Lao Dong Newspaper)

The tender results are expected to be announced on October 25. The winning bidder will deliver the goods to Indonesia by December 30, 2023, or may be extended when Bulog has received approval to extend its import license from the Indonesian Government .

In recent years, Indonesia has tried to be self-sufficient in rice supply, but from the end of 2022 due to unusual drought, they are forced to import rice to ensure national food security.

In early 2023, the country planned to import 2 million tons of rice to ensure national food security and respond to the El Nino phenomenon. However, they recently adjusted the target, increasing the amount of rice imported for the whole year to about 2.4 million tons. According to the plan, the country will continue to import an additional 2 million tons of rice in 2024.

Data showed Indonesia imported 1.79 million tonnes of rice between January and September 2023, up from 288,707 tonnes in the same period last year. The largest shipments came from Thailand, followed by Vietnam, India, Pakistan and Myanmar.

In the context of India not relaxing its rice export restrictions; severe weather is threatening global supply, Indonesia's continuous opening of rice tenders has "heated up" the world rice market as well as Vietnam.

According to the Vietnam Food Association (VFA), after falling in the first week of October, Vietnam's rice export prices have increased again this past week, by $20 per ton. At the end of the trading session on October 23, the export price of 5% broken rice was at $643 per ton and 25% broken rice was at $628 per ton.

Commenting on the Bulog package, Mr. Nguyen Van Thanh, Director of Phuoc Thanh 4 Production - Trade - Service Company Limited - said that when the Philippines imposed a rice price ceiling and imposed import tax on rice, the export price of Vietnamese rice decreased slightly, but then they removed the price ceiling, so the price of Vietnamese rice increased again. Thus, the Bulog package combined with the Philippines removing the rice price ceiling will cause the price of Vietnamese rice to skyrocket.

However, according to Mr. Thanh, no business dares to sell rice at this time . Mr. Thanh explained: To sell, there must be inventory, while the rice supply at this time is exhausted and must wait until the Autumn-Winter crop. "With this development, the price of Vietnamese rice will certainly not decrease, on the contrary, it may increase further. But if it increases too much, other countries will take all the opportunities to sell rice from Vietnam, because Bulog is calling for bids from many countries, not just Vietnam , " said Mr. Thanh.

Statistics show that by the end of September, Vietnam's rice exports reached 6.6 million tons, earning 3.66 billion USD. In the first 9 months of 2023, ASEAN and China were the two main export markets for Vietnamese rice. Of which, exports to ASEAN reached 3.82 million tons, up 28%; China reached 859 thousand tons, up 37.2% over the same period last year. In total, the amount of rice exported to the two markets reached 4.68 million tons, accounting for 73% of the country's rice exports.

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