The latest target of 7.5 million tonnes is higher by 200,000 tonnes than the target set in the previous month. And if this comes true, the rice exports would bring more than 3.7 billion dollars this year, according to MARD.

The rice export in the first nine months of the year represented the increase of 9.13 percent in quantity and 23.71 percent in value in comparison with the same period of the last year. In the first 10 days of October 2011, Vietnamese exporters delivered 75,000 tonnes of rice more, worth 40 million dollars.

According to the Vietnam Food Association (VFA), Vietnamese rice exporters have signed the contracts on exporting 1.750 million tonnes of rice to Indonesia in the whole year 2011, while 1.230 million tonnes have been delivered. The export price has increased by four percent over the previous month, now hovering around 517-520 dollars per tonne.

Unlike the previous year, when the export rice prices went down in the last months, the export prices tend to go up this year.

Kim Dung, a well known analyst of Agroinfo, an agriculture analysis centre, said that there are a lot of factors that support the rice prices.

First, since October 7, 2011, the Thai government started the programme on collecting rice from farmers at high prices (higher by 50 percent than the market prices of the previous-crop rice) to ensure stable profit for farmers. With the higher collection prices, Thai exporters will have to export their rice at the prices of 750-800 dollars per tonne and higher, which would cause fluctuations to the world's rice market.

Second, the floods rushed down in many South East Asian countries, which has caused the supply falls in short term. It is estimated that Thailand may lose 3-5 million tonnes of rice due to the floods, while the floods in Cambodia, Laos, the Philippines and Myanmar would also cause the decreases of 2-3 million tonnes in supply.

The Philippines, the big rice importer in the world, which is thought to lose one million tonnes of rice due to the floods, may push up the imports, and the targeted import volume of 500,000 tonnes in 2012 may be adjusted.

In Vietnam, the floods in Mekong Delta are also believed to influence the output of the autumn-winter crop. Meanwhile, the domestic rice price has been increasing since traders try to store rice for fear that the rice price would increase further.

Third, the Indian rice export price has been increasing, while it is now difficult to fulfill deliveries due to the traffic jam at ports.

Fourth, the US long grain rice output is believed to see a decrease of 20-30 percent in comparison with 2010, while the country is facing the low quality of the old-crop's rice.

The output of the new-crop rice in South America may be lower than that of the previous year, because the prices are not high enough to encourage farmers to grow rice. Meanwhile, some rice growing areas in South America are lacking water for rice fields because of the La Nina.

Also according to Agroinfo, there are only a few factors that may cause to the price decreases. FAO and USDA both believe that the world's rice output would see the record high this year, and the reserves ratio in 2011 would maintain at 30 percent.

Experts believe that Vietnam would be a good supplier in the eyes of foreign rice importers, because Vietnam can provide rice with the quality as high as Thai rice, and at lower prices. Especially, sources have said that even Thai businesspeople have also come to Vietnam to seek rice supply sources, since Thai domestic price has become too high.

The experts believe that there would be two main market segments, including the low cost rice with the supplies coming mostly from India, and the high grade rice from Thailand and Vietnam. Since the Thai rice price has been increasing too sharply, Vietnam would get benefit in the market segment, which means that Vietnamese rice would be kept at high prices, at least until June 2012.

Thoi bao Kinh te Vietnam - October 22, 2011

Vietnam cuts 2011 rice export forecast

Vietnam slightly lowered on Thursday its rice export forecast for this year to more than 7 million tonnes from an initial projection of up to 7.5 million tonnes, but said floods did not affect production.

The projection reflects slowing sales in recent weeks as buyers stand back to assess flood damages in top exporter Thailand, where prices have been rising also due to a government buying scheme, or to seek cheaper grain in India and Pakistan.

"In this year 2011 despite heavy natural calamities, we do hope that rice exports in Vietnam could for the first time jump to above 7 million tonnes," deputy Agriculture minister Bui Ba Bong told a rice conference in HCM City.

Earlier this month, the agriculture ministry had projected the world's second-largest exporter to ship a record of 7.5 million tonnes.

Waters, which have risen to the highest level since 2000, submerged more than 20,000 hectares (49,420 acres) of rice in the Mekong Delta food basket and destroyed some 7,000 hectares, or 1 percent, of the area planted for a minor crop, government data showed.

Flooding also prevents the operation of rice mills and raises production costs.

Despite the floods, Vietnam's paddy output is expected to rise to 41 million tonnes this year from 40 million tonnes in 2010, Bong told reporters on the sidelines of the conference.

Paddy rose to between 7.5 million and 7.8 million dong ($359-$373) per tonne in the Delta on Thursday, from 6.8-7.5 million dong a week ago.

Reuters - October 25, 2011