Reasons for the increase in Thai rice prices while Vietnamese rice prices remain unchanged.

After reaching a historic high of $663/ton at the end of October 2023, the price of Vietnamese 5% broken rice cooled down in early November 2023, falling by $10/ton to $653/ton and remaining at this level until now.

Vietnamese rice prices have remained unchanged for over a week.

In contrast to Vietnamese rice, Thai 5% broken rice has seen a continuous increase over the past week. Specifically, according to updates from the Vietnam Food Association (VFA), the price of Thai 5% broken rice has increased by $13/ton compared to the previous week, reaching $578/ton.

With the aforementioned increase, the current price of Thai rice is $10 higher than comparable Pakistani rice but still $75 lower than Vietnamese rice.

The increase in Thai rice prices is attributed to the government's approval of an additional budget of 56 billion baht to support the rice industry. This brings the total state spending to support rice during the 2023/24 harvest season to 111 billion baht. Thai authorities estimate that this program is expected to benefit 4.68 million households and help absorb (temporarily store) approximately 3 million tons of rice.

Regarding export volume, according to the head of the Thai Ministry of Commerce, in 2023 the country could export approximately 8.5 million tons of rice, an increase of 0.5 million tons compared to the initial forecast. In 2024, rice exports may decrease to 7.5 million tons due to India potentially easing export restrictions.

Regarding Vietnam, explaining the reason for the stagnant rice prices over the past week, opinions suggest that: Vietnam's export rice prices are already very high, making further increases difficult. "If prices rise further, it will be difficult to sell, and buyers will seek out other suppliers with better prices," said Mr. Phan Van Co, Marketing Director of Vrice Co., Ltd.

Furthermore, domestic rice supplies are also limited, resulting in slow transactions at the moment. Even when export prices rise, domestic prices increase accordingly. It's worth noting that, according to many rice export businesses, with the average market price of paddy rice at 9,100-9,200 VND/kg, the current export price of 5% broken rice must be above 700 USD/ton for businesses to make a profit (currently, the asking price is 653 USD/ton, and selling at this price would almost certainly result in losses).

In reality, according to the Vietnam Food Association (VFA), the rice market is experiencing significant fluctuations and is consistently trending upwards. According to Mr. Do Ha Nam , Vice Chairman of the VFA, the current sharp increase in Vietnamese rice prices has led to some businesses incurring significant losses and canceling contracts, especially those with weak financial capacity.

For large businesses that are nearing completion of deliveries, in order to maintain credibility with partners, they are forced to buy in bulk at high prices to have enough goods to fulfill contracts. This is one of the main reasons driving up rice prices.

Mr. Nam argued that excessively high rice prices are not necessarily an advantage because customers will seek out other markets offering better prices and comparable quality to Vietnamese rice. This could lead to the risk of losing the fragrant rice market to Thai businesses, as their rice prices are highly competitive with Vietnamese fragrant rice.

According to inter-ministerial data, it is estimated that by the end of October 2023, Vietnam exported 7.1 million tons of rice worth approximately US$3.97 billion, an increase of 17% in volume and 34.9% in value compared to the same period in 2022. The average export price is estimated at US$558 per ton, an increase of 15.3% compared to the same period in 2022.

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