Vietnam's rice prices may fall further

Vietnam's rice prices may fall further

SINGAPORE (Dow Jones): The continued absence of Indonesian
private traders from Vietnam's rice market is likely to further
depress Vietnamese rice prices in the next few weeks, rice
traders and industry sources said this week.

Vietnamese rice exports are also expected to shrink in August
and September on the temporary absence of the Indonesian traders,
they said.

Indonesian private traders were active buyers of Vietnamese
rice until earlier this month, when they were forced out of the
market by the rupiah's weakness against the U.S. dollar.

At 0825 GMT, the U.S. dollar was changing hands at Rp 7,590,
compared with Rp 7,735 late Tuesday. It was at Rp 6,665 late July
16 and traded below Rp 7,000 in the month of July.

A slowdown in rice shipments from Vietnam to Indonesia became
apparent this week, said a cargo surveyor source in Ho Chi Minh
City. "In the last two weeks, there was still a lot of activity"
at the ports, he said.

"Most shipments were delayed. Some were canceled, but 95
percent of the orders are still going on," he added.

Because the Indonesians aren't making fresh trades, he said
Vietnam's monthly sales to Indonesia may fall by 20 percent-30
percent.

August shipments of Vietnamese rice to Indonesia could total
about 200,000 metric tons while September shipments could reach
about 150,000 tons, he said.

Vietnamese rice offers have fallen about US$2-$3 a ton in the
last few days, with 25 percent broken rice quoted steady around
US$209-$210/ton, free on board Ho Chi Minh City port, and
US$208/ton, FOB Cantho port.

Offers for Vietnamese 25 percent broken rice, the grade most
requested by Indonesian traders, could slide to US$205/ton in
their absence, said a Ho Chi Minh City trader with an
international trade house.

But the offers won't fall below US$200/ton because of the
limited exports for the rest of the year, said a Vietnamese rice
company official.

"We (Vietnam) have exported about 3.2 million tons (so far
this year) so we still have 600,000 tons for export from October
to December," he said.

Vietnam's 1999 rice exports are put at 3.8 million-3.9 million
tons. It is the world's second largest rice exporter, after
Thailand.

A total withdrawal of the Indonesian traders isn't expected
because of the huge demand in Indonesia, rice traders said.

Also, local rice prices in Indonesia are still higher than
imported rice prices, making it lucrative for Indonesian traders
to bring in imported rice, they said.

According to one Ho Chi Minh City trader, there is talk that
the Indonesian traders are renegotiating their commission with
Bulog, Indonesia's National Logistics Agency.

In any case, the traders will return to market, perhaps in one
to two months, when they can accept the rupiah at its lower
level, he said.

Indonesia is the world's largest rice importer. While it
forecasts its import needs in the year to March 31, 2000 at 2.0
million tons, the U.S. Department of Agriculture projects its
1999 imports at 3.7 million tons.