Vietnam agricultural report research rice market review and analysis

Rice prices quote of Vietnam, Thailand in the world market first 3 weeks of March to middle of April, 2014 ...22 List of figures Figure 3.. According to the VFA, until middle of April 2

Project

Vietnam Agricultural Report Research

May 2014 Rice Market Review and Analysis

Research duration: from 1st April to 8th May 2014

Reported by: Ho Cao Viet (PhD)

Submission of draft report for review: 6th May 2014

Submission of full report: 8th May 2014

Table of Contents

1 Introduction 4

2 Hot topics of the month 4

3 Weather condition and its impacts to rice production 6

3.1 Weather forecasting on April 2014 7

3.2 Impacts of weather to agriculture 10

4 Situation of rice production-consumption in Vietnam and global market 11

4.1 Progress stages, crop conditions 11

4.2 Demands in domestic, exportation & importation 15

4.3 Domestic prices and Market trends 19

4.4 Export prices and Market trends 20

4.5 Analysis, Opinion, and Prediction 23

4.6 Other related news 24

List of tables

Table 1 Forecast of average temperature and precipitation on April 2014 in Vietnam 9 Table 2 Monthly hydrological forecasting for rivers in the Central highland and

Southern of Vietnam (1st to 30 Apr 2014) 10

Table 3 Rice sowing area in WS & SA crop by region (up to 15th Mar 2014) 12

Table 4 Rice sowing area of WS crop in the North provinces (up to 15th Mar 2014) 12

Table 5 Sowing area of SA rice crop in the MRD (up to 15th Mar 2014) 13

Table 6 Harvesting area of WS rice crop in the South provinces (up to 15 th Mar 2014) .14

Table 7 Weekly rice exportation (Dec 2013 to end of March 2014) 15

Table 8 Monthly rice exportation (Jan 2013 to Mar 2014) 15

Table 9 Rice exportation by import country in March, 2014 .16

Table 10 Price of different rice grades in MRD (27th Mar to 24th Apr 2014) 19

Table 11 Rice prices quote of Vietnam, Thailand in the world market (first 3 weeks of March to middle of April, 2014) 22

List of figures Figure 3 Weather Maps (1 st April & 17 th April 2014) 8

Figure 1 Forecast of precipitation mean on April, 2014 8

Figure 2 Forecast of temperature mean on April, 2014 8

Figure 4 Target markets of Vietnam rice by quantity in 1 st quarter of 2014 .17

Figure 5 Target markets of Vietnam rice by value in 1st quarter of 2014 18

Figure 6 Exported price of Vietnam rice by continent/region in 1stquarter of 2014 .18

Figure 7 Fluctuation of rice price in domestic by grade from March to April 2014 19

Figure 8 Fluctuation of long-grain paddy price in domestic from March to April 2014 20 Figure 9 Volume of Vietnam exported rice and value (from Jan to 14th Apr 2014) 22

1 Introduction

 The database and information used in report were collected since March

2014 to the end of April 2014 from different official sources as well as direct contacts to experts who involved to rice sector

 Information is updated and bearing the major events and topics of rice production and consumption in Vietnam in referring to the global market as well as the analysis of authors and rice specialists

2 Hot topics of the month

 Vietnam has won a tender to supply 800,000 tons of 15% broken

well-milled white rice to Philippines The tender is likely to be awarded to

Vietnam’s Vinafood II, which submitted the lowest bid in the Philippines open tenders to import 800,000 tons of rice on 15th April 2014 (MARD, April

2014) Vinafood II offered to supply rice in four separate batches of

200,000 tons each from May to August at an average price of $438.69 per

ton (According to Philippines National Food Authority) Rice Vietnamese companies had tried to win this tender because they expected to help

reduce rice stockpiles and prop up rice prices in the MRD in the

between-crop period in next few months

 Before the tender, there were concerns that Vietnam could fail to compete with Thailand as Vietnam’s rice export price was around $10 per ton higher than that of Thailand Meanwhile, Thailand has around 10 million tons in

stock and wants to reduce it over fears of quality deterioration

 The USDA expects Vietnam to export about 7.5 million tons of rice in 2014,

up about 10% compared to 2013 However, exports so far are lower than

last year According to the VFA, until middle of April 2014, Vietnam had exported approximately 1.417 million tons of rice at value of $652.4 million, down about 38% from 2.15 million tons of rice exported during the first four

months of 2013 In next quarter (from April to June, 2014), Vietnamese rice

companies expect to export up to 2.4 million tons of rice The nation estimates to ship around 600,000 to 800,000 more tons abroad as of the

end of April, taking to around 2.4 million tons the total rice export volume in

the first four months this year Export prices average is at $390 per ton

 According to VFA’s news, dried paddy in the MRD is priced at 5,150 to 5,250

dong per kg and the long-grain type at 5,400-5,500 dong The free on

board (FOB) price of 15% broken rice is 7,450-7,550 dong per kg At present, fresh paddy is around 4,400 dong per kg while the long-grain type ranges from 4,700 to 4,800 dong per kg

 Concerning to stockpiling scheme of 2 million tons of paddy, the rice

enterprises have bought 743,000 tons of rice by April 2013

 According to MARD’s report of March 2014, rice area damaged by rat was

around 10,000 ha, of which 74 ha was extremely damage Proportion of rice

area under rat damage varied from 1-20%, down compared to the same period last year The golden snail, planthopper, diseases were also concerned in the SA rice crop in all ecological regions from the North to the

South (seeing photo)

Trapping rat in Summer –Autumn rice crop in MRD

Photo by: Vo Thi Hong Thuy, 2014

3 Weather condition and its impacts to rice production

 On April 2014, rainfall was generally lower than the average rainfall of the

same period in recent years Precautions should be accompanied by strong

thunderstorm whirlwind and hailstorm (NCHMF, April 2014)

 However, the hurricane season is likely to be late than usual The monthly

total rainfall of the first half of rainy season (May to July, 2014) predicts

lower than compared to previous year; whereas in the second half of rainy

season (August to October, 2014) is approximately at the same level of

previous year In the North, the heavy rains will mainly occur from June to

August, 2014 and it’s still cool in March & April 2014.

 In the Central region, from Nghe An to Ninh Thuan province, the rainfall

from May to August 2014 are forecasted at lower than in compared to

previous year Therefore, the water shortage, drought in the region will be

happen during this period It will affect to farming activities

A campaign to exterminate rat (major epidemics in SA rice crop) in MRD

Photo by: Bureau of Plant Protection, DARD of King Giang, 2014

3.1 Weather forecasting on April 2014

from 20-50%

 Highland and South:

Average temperature in month is equivalent of mean of temperature in 30 previous years at -0.5 to 0.5oC In the highland, the rainfall will be equivalent

to mean of rainfall in 30 previous years at level of -20% to 20% On the

contrary, in the South, level of rainfall will be down from 20 to 50% compared

to previous years

In general, the temperature in April is higher than March from 0.9 to 3.5 o C in

whole country Particularly it will be a little bit high in the Central and South

The rainfall will increase in April, but the drought will also take place in some

rice areas (NCHMF, 2014)

Figure 3 Weather Maps (1st April & 17th April 2014)

Source: Weather online (www.weatheronline.co.uk)

 In the end of April 3014, the sea water and the salinity intrusion has caused

the people in MRD suffer Rice farmers in the coastal provinces of Tien

Giang, Ben Tre, Tra Vinh, Bac Lieu, Ca Mau and Kien Giang are dealing with fresh water shortage due to raining season coming late in this year Water

irrigation is very important in SA rice crop In Ca Mau peninsula, there was only little water in the canals, while WS crop harvesting had finished and SA

crop is starting in early of May Irrigation cost will probably increase in SA

rice crop (According to NCHMF, April 2014)

Table 1 Forecast of average temperature and precipitation on April 2014 in Vietnam

Ord Station

30-years mean of temperature (oC)

Forecast of temperature (oC)

30-years mean of rainfall (mm)

Forecast of rainfall (mm)

Table 2 Monthly hydrological forecasting for rivers in the Central highland and Southern of Vietnam (1st to 30 Apr 2014)

Mean

4th quarter

2014

Compared to the mean annual stage

Ma Ly Nha Water level

Source: NCHMF, 2014 (accessed on 18 th April 2014)

(http://www.nchmf.gov.vn/web/en-US/71/110/21077/Default.aspx)

3.2 Impacts of weather to agriculture

 In the North, according to dispatch No.605/TT-CLT issued on 14th

April 2014, concerning the rice sowing in WS 2013-2014 The prolongation of cold

weather in the North, particularly the mean of temperature and photoperiod

was low in February and March that affected to growth of rice, diseases in

some rice varieties Growth period may last from 7 to 10 days compared to

the previous rice crop in last year (MARD)

 According to local extension staff in the MRD, in the SA rice crop 2014, until

to the end of April, the prolonged drought occurred in a large part of rice

areas, has caused damages to areas where having no feasible irrigation system The saltwater intrusion also affected to SA rice crop As a

consequence, the fuel costs for rice production will be certainly high that contributed to high unit price

 While the weather was not supportive for SA rice crops, the high humidity

and temperature are major factors that increase insects (brown

planthopper), diseases (leaf folder, stem borer, blast) and severe epidemics

such as golden snails and rat (MARD)

4 Situation of rice production-consumption in Vietnam and

global market

4.1 Progress stages, crop conditions

 In the North: according to MARD, up to the middle of March, in the Northern

provinces have basically completed the sowing of WS rice crop, totally

1,104.2 thousand hectares, 98.6 % compared to the same period last year

Due to unfavorable weather, sowing area in the Midlands, Northern

mountainous, and North Central are lower than the same period last year,

at 1.6 % and 2.3 % respectively (Table 3 & 4)

Cutting rice in MRD, Winter Spring crop

Photo: Ho Cao Viet, 2014

Mechanization in rice harvesting, MRD Vietnam

Photo: Ho Cao Viet, 2014

Table 3 Rice sowing area in WS & SA crop by region (up to 15th Mar 2014)

Region Sowing area to 15

Mar.2013 (1,000 ha)

Sowing area to 15 Mar.2014 (1,000 ha)

Compared 2013/14 (%)

Winter – Spring crop

Source: MARD, April 2014

Table 4 Rice sowing area of WS crop in the North provinces (up to 15th Mar 2014) Region/Provinces Sowing area in WS crop (hectare)

Source: MARD, April 2014

 In the South: until to 15th of March 2014, the harvest area of WS rice crop

has reached nearly 800 thousand hectares, mainly concentrated in MRD

provinces In this year, the harvesting time is prolonged compared to the same period last year Around 60 % of area was harvested The flooding was main cause in MRD because it withdraws slowly in this year However,

harvesting progress was accelerated in the end of March

 According to the initial reports of the Mekong Delta provinces, the average

yield of WS rice crop is estimated at 7 tons per ha, higher than the previous crop about 2 tons per ha; especially, in the province of Long An, Can Tho,

Hau Giang, Dong Thap, Vinh Long, Tien Giang, and An Giang, where the average yield is estimated at above 7 tons per ha (Table 5)

 At the same time, SA rice crop has also sown Up to 15th March, sowing area

was around 212 thousand hectares, nearly 60 % compared to the same

period last year There was 60.7 thousand hectares in Dong Thap, 50 thousand hectares in Soc Trang; 38.5 thousand hectares in Tien Giang, and 21.8 thousand hectare in Can Tho province (Table 5 & 6)

Table 5 Sowing area of SA rice crop in the MRD (up to 15th Mar 2014)

Region/Provinces Sowing area in SA crop

Table 6 Harvesting area of WS rice crop in the South provinces (up to 15th Mar 2014) Region/Provinces Harvesting area in WS

crop (hectare)

Compared to sowing area in WS crop (%)

Yield (ton per ha)

4.2 Demands in domestic, exportation & importation

 Data generated from Vietnamese Customs showed that on March 2014,

Vietnam has exported around 108 thousand tons of rice, estimated about

$281.4 million Most of rice specialists expect that rice exportation will be

increased in next month due to Vietnam has won a tender to export 800

thousand tons to Philippines (Table 7)

Table 7 Weekly rice exportation (Dec 2013 to end of March 2014)

Source: General Department of Vietnamese Customs

Table 8 Monthly rice exportation (Jan 2013 to Mar 2014)

Reporting period

Compared

to previous year (%)

Tons USD Tons USD Tons USD Tons USD

Table 9 Rice exportation by import country in March, 2014

 Quantity of export rice on March has increased remarkably at about 49.7% compared to previous month and it has similarly trend as value of

exportation also increased by 45.6% This is a big effort of exporters as well

as government institution (Table 8)

 However, the situation of rice exportation in first quarter was being slowly

than last year Quantity of exported rice on March 2014 was 7.9% lower

than same period last year Total export value was below at 4.4% compared

to previous year (Table 8)

 On March 2014, the Asia countries were the major importers of Vietnam

rice 91% of rice quantity and 90% of import value was presented by this

continent (Figure 4 & 5) Philippines and China are continuing to be in the

top of biggest rice importers from Vietnam (380 and 581 thousand tons,

respectively; equivalence of $175 and $250 million) It occupied by 34.9%

and 49.8% of Asia’s rice imported whole volume in 1st quarter of 2014

(502.67 thousand tons) Africa is second rice importer of Vietnam that was

6% of rice quantity and 7% of import value In first 3 months of 2014, this continent accelerated to import rice from Vietnam at 73 thousand tons that equivalence to $38.2 million (Table 9)



Note: Calculated by quantity of exported rice (ton)

Source: generated from data of General Department of Vietnamese Customs

Figure 4 Target markets of Vietnam rice by quantity in 1st quarter of 2014