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AgriBusiness Sales to PHL, China hike prices of Vietnam rice
wednesday | november 6, 2013
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HANOI -- Vietnam has recently signed contracts to sell a total of 120,000 tons of rice to private companies in the Philippines, helping push up export prices by around 10% in recent weeks, traders said here on Friday last week. Securing the Philippines contracts will come as a relief to the world’s second largest exporter of the grain after a long period without major contracts, but higher export prices could mean loss of new deals to rivals such as Thailand and Pakistan. Half of the volume was the 5% broken rice, while the 15-broken and 25-broken grades made up the rest in the deals struck by Vinafood 2, Vietnam’s largest rice exporter, according to three traders at foreign firms in Ho Chi Minh City. HIGHER PRICE Loading will begin next month, one trader said. Officials at Ho Chi Minh City-based Vinafood 2 could not be reached for comment. The 5% broken rice was quoted last week at $400-$405 a ton, free-on-board (FOB) Saigon Port, up around 10% from the start of this month. OPTIONS “Buyers can opt to take rice from Thailand or Pakistan,” a second trader said, noting that Thai 5% broken grain was quoted at $410 a ton, FOB basis. “When the gap is less than
Fresh rice harvested by Vietnamese farmers.
$20 a ton, buying Thai rice is better,” he said. The jump in Vietnamese rice prices in recent weeks is also due to demand from China, traders said. BIGGEST BUYER Rice has been shipped from the southern region incorporating the Mekong Delta food basket to Vietnam’s port city of Haiphong in the north and moved further on to China. China, Vietnam’s biggest rice buyer so far this year, has bought some 1.2 million tons of the grain via border
trade, the official Vietnam Economic Times said on Friday, citing Vietnam Food Association data. DIFFICULTIES Vietnam could export less than 7 million tons of rice this year due to market difficulties, the newspaper quoted the association’s chairman Truong Thanh Phong as saying. This a mount, t he newspaper added, is below the association’s revised target of shipping between 7.1 million and 7.2 million tons.
UNKNOWN FACTOR “Sales to China via border trade can affect Vietnam’s rice export management because the authority does not know how much rice has gone to China,” a trader said, adding that rice exports via border trade were not included in the country’s statistics. Based on Vietna m government data, China has imported 1.62 million tons of rice in the first eight months of 2013 from the Southeast Asian nation, up 3.2% from the same period last year. -- Reuters
WHILE local dairy producers are capable of propping up milk output to w ipe out i mpor ts, a farmers’ cooperative said t he proh ibit ive cost of production is discouraging more farmers from going into dairy farming. The Santa Maria (Bulacan) Multi-purpose Dairy Farmers’ Cooperative (SMMDFC) noted that the
Philippines is importing 99 percent of its milk and dairy product needs despite the ability of local producers to raise and breed dairy animals. “Our cooperative, for i nst a nce, is c apable of processing some 700 liters of fresh milk into yoghurt, soft cheese and bottled or f lavored milk daily. These dairy/PAGE 21
‘High production cost hampers local dairy output’
Coffee drinkers treated to more arabica as prices sink SARAH MCFARLANE, Reuters
LONDON - Coffee drinkers in Brazil, America, Eastern Europe and the Middle East are expected to down more arabica beans in their brew in the coming year as cheap prices attract additional demand for the higher spec product. A surplus from top grower Brazil after two successive bumper crops helped drag arabica prices to a four-anda-half-year low this week, which is likely to prompt roasters to increase the use of the bean in their blends. But drinkers detecting more of arabica’s distinctively sweeter, gentler notes in their cup will probably be saying more about the power
of suggestion than their discernment, as roasters will only be tinkering with blend changes that consumers are unlikely to notice. A Reuters pol l of 10 international coffee traders and roasters showed that between 3 and 4 million 60-kilogramme (132 lb) bags of coffee demand - out of a market total of more than 140 million - is forecast to switch out of robusta beans into arabica in 2013/14. Arabica beans are usually found in high quality brands and ty pically trade at a premium to the hardier, more caffeine-rich robusta beans, which are widely used in instant coffee.
Lately the price difference between some of the lower grade arabicas and robustas has been eroded, putting in reverse the trend from 2011/12 , when roa sters increased the proportion of robusta in their blends to the tune of around 5 million bags globally due to a historically high premium on arabicas. “Clearly it’s happening, although I don’t think it’s going to be as big as the switch we saw out of arabica in 2011/12,” a European analyst said. “The biggest swing is in Brazil.” The world’s top coffee grower is also one of the largest consumers, using over 20 million bags a year. Up to 1.5 million bags of
Brazil’s domestic robusta consumption was forecast to switch into arabica in 2013/14. “Domestic roasters are fairly f lexible so they can move out of robusta into low-grade arabicas on a large scale,” said a trader, adding that Brazil was a very pricesensitive market. SECRET RECIPE Coffee roasters, typically secretive about their blends, stepped up substitution of arabicas with robustas after ICE benchmark a rabica futures rose to a 34-year high in May 2011 and the premium over robusta hit about $1.90/lb. The premium has since narrowed to below 40 cents, coffee/PAGE 21