World rice export prices skyrocket after India's move to impose tariffs on parboiled rice

Last weekend, India - a rice exporter that accounts for 40% of the global rice trade - continued to make new moves to restrict rice exports. Specifically, on August 25, India announced a 20% tax on parboiled rice exports until October 16, 2023. However, for this type of rice, India said it would implement relief measures for specific cases. Parboiled rice shipments that are at customs ports without an "export order" (LEO) approval and supported by a valid "letter of credit" (LC) but issued before August 25, 2023 will be exempted from this export tax.

Not stopping there, on August 27, the Indian government decided to not allow the export of basmati rice below $1,200/ton to limit the possibility of “illegal” transportation of non-white basmati rice under the guise of premium basmati rice. Existing contracts below $1,200/ton remain cancelled. A committee chaired by APEDA will be set up to assess future actions.

Global rice prices fluctuate strongly

The above information, as soon as it took effect, had an impact on global rice prices. Specifically, according to the Vietnam Food Association (VFA), at the end of the trading session earlier this week (August 28), the export rice prices of three countries including Vietnam, Thailand, and Pakistan were adjusted up by 2-10 USD/ton.

Of which, Pakistani rice increased the most by 10 USD/ton and is currently priced at 608 USD/ton for 5% broken rice (up 10 USD); 533 USD/ton for 25% broken rice (up 5 USD).

Vietnam's 5% broken rice price was also adjusted up by 5 USD/ton for both 5% and 25% broken rice varieties. Currently, Vietnam's 5% broken rice is at 643 USD/ton and 25% broken rice is at 628 USD/ton.

Thai rice prices have been adjusted in opposite directions, increasing by 2 USD/ton for 5% broken rice but decreasing by 2 USD/ton for 25% broken rice. Thus, the prices of Thai rice are currently 630 USD/ton and 563 USD/ton, respectively.

With today’s adjustment, Vietnam’s rice price continues to be the highest in the world , 13 USD/ton higher than Thailand’s and 35 USD/ton higher than Pakistan’s. These are also the highest prices since the historic rice price fever in 2008.

Although rice prices have increased, according to many exporting enterprises, they almost do not dare to sign new rice export contracts and have also temporarily stopped purchasing rice in the domestic market to wait and see. The reason given by enterprises is that the domestic rice price is currently very high and if they purchase at the current price, enterprises will suffer losses.

“With the current domestic rice price, exporting enterprises must offer at least 670 USD/ton to avoid losses. But at this price, customers are not willing to buy. What people fear most is not knowing when India will lift its export ban policy. If we sign a high price now, we will likely suffer heavy losses,” Mr. Binh explained, adding that the enterprise has negotiated to postpone the 20,000-ton order to the winter-spring crop, because at the current price, we will lose money on delivery and cannot sell.

In fact, in the domestic market, according to VFA statistics, rice prices were also adjusted up from 136-313 VND/kg last week. Accordingly, the current highest price of regular rice at the field is 8,050 VND/kg, while regular rice at the warehouse is 9,750 VND/kg. Exported 5% broken rice also increased to 14,800 VND/kg and 25% broken rice to 14,400 VND/kg.

Notably, on the first day of this week, rice prices in some localities were also adjusted up by 200 VND/kg. Specifically, according to the Department of Agriculture and Rural Development of An Giang, Dai Thom 8 rice fluctuated from 8,000 - 8,200 VND/kg, an increase of 200 VND/kg; OM 18 rice was adjusted to 8,000 - 8,200 VND/kg, an increase of 200 VND/kg; Nang Hoa 9 was priced at 8,000 - 8,400 VND/kg, an increase of 200 VND/kg.

The remaining rice varieties, although not increasing, are still at high levels, including: IR 50404 rice is stable at 7,800 - 8,000 VND/kg; OM 5451 rice is priced at 7,800 - 8,000 VND/kg; Japanese rice is 7,800 - 8,000 VND/kg.

According to the General Department of Customs, as of August 15, 2023, Vietnam had exported 5.35 million tons of rice with a turnover of 2.88 billion USD, a sharp increase of 22% in volume and 35% in export turnover over the same period last year.

The Philippines continues to be Vietnam's largest rice import market, accounting for nearly 40% of the country's total rice export volume in the first 7 months of this year.

Notably, Vietnam's rice exports to China, the second largest rice import market, increased by more than 60% compared to the first 7 months of 2022. At the same time, Vietnam's rice exports to a series of markets recorded "sudden" increases, such as Indonesia (up 15 times), Senegal (up 7.8 times), Türkiye (up 64.8 times) ...

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