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Vietnam struggles to find new buyers as Chinese demand dwindles

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Export prices of rice from Vietnam fell this week as the country struggled to find new buyers amid waning demand from China, while a drought continued to squeeze supply in Thailand and a weak rupee weighed on rates for the Indian variety.

[BENGALURU] Export prices of rice from Vietnam fell this week as the country struggled to find new buyers amid waning demand from China, while a drought continued to squeeze supply in Thailand and a weak rupee weighed on rates for the Indian variety.

Prices for Vietnam's 5 per cent broken rice fell to US$335-345 a tonne on Thursday from US$340-350 last week.

"Vietnam is struggling to find new markets to compensate for the sharp decline in shipments to China," a trader based in Ho Chi Minh City said.

Exports to China in the first seven months of this year fell 65.7 per cent from the corresponding period last year, to 318,100 tonnes, Vietnamese customs data showed.

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"We heard from Chinese importers that China's demand for rice remains high but the importers cannot buy from Vietnam because of new technical barriers the Chinese government has imposed," the trader said.

Vietnam's Ministry and Industry and Trade said on Wednesday it would organise several trade promotion trips this year to boost rice exports.

Meanwhile, Thailand's benchmark 5 per cent broken rice prices narrowed to US$415-425 a tonne on Thursday from US$406-425 last week, with traders attributing the relatively high prices to concerns over supply as the country grapples with its worst drought in a decade.

"Domestic prices are up due to fears over possible shortage of rice because of the drought," a Bangkok based trader said.

AFRICAN MARKET ACTIVE

Demand, however, remained relatively flat and the strong baht - Asia's best performing currency this year - has kept Thai prices higher than those of other Asian hubs.

"It's hard to find new buyers as the price will likely increase going forward due to the foreign exchange as well as domestic supply situation," another trader said.

Top exporter India saw prices of its 5 per cent broken parboiled variety ease to about US$374-377 per tonne from last week's US$377-381.

"Africa market is again active now," said Nitin Gupta, vice president for Olam India's rice business.

"Due to the currency depreciation in the last couple of days, prices have corrected."

India's rice exports in April-June dived 28.2 per cent from a year ago to 2.35 million tonnes, a government body said on Monday, due to subdued demand for non-basmati rice from Africa.

In neighbouring Bangladesh, traders demanded cash incentives for rice exports as the country has been unable to secure any deals since a long-standing ban was lifted in May.

"At present, we're not in a position to compete with India or Thailand for parboiled rice. It's almost impossible to export any rice unless the government provides at least 20 per cent cash subsidy on exports," a Dhaka-based trader said.

REUTERS