Rice prices up in India, Vietnam as rains dampen crop supply

A shopkeeper arranges signs with prices on bags of rice at a shop in Mumbai March 19, 2009. Indian inflation headed towards zero in early March and analysts tipped it would soon turn negative, opening the way for the Reserve Bank of India to cut interest rates further to prop up demand and growth. The wholesale price index, India's most widely watched inflation measure, rose 0.44 percent in the 12 months to March 7, sharply lower than the previous week's 2.43 percent and below a forecast of 0.89 percent in a Reuters poll. REUTERS/Arko Datta (INDIA BUSINESS FOOD DRINK) - RTXCYWA

Rice prices in India and Vietnam rose this week as prolonged periods of rainfall threatened supply in the two major exporters of the grain.

India's 5 percent broken parboiled rice prices edged up by $4 to $404-$407 per tonne as heavy rainfall in key growing regions is expected to delay harvesting.

"Key producing regions in southern and eastern India received rains in last few days. This has delayed harvesting of the summer rice crop," said an exporter based in the southern state of Andhra Pradesh.

"In some districts crop was damaged. Rainfall could reduce production," he added.

Production from summer-sown crop in India, the world's biggest rice exporter, is likely to fall 2 percent to 94.48 million tonnes, according to farm ministry estimates.

In Vietnam, prices rose amid scarce supply, as a longer period of rains took a toll on the current crop's quality and delayed planting of the major winter-spring season.

"I'm not sure how much crop yield we would get from the current autumn-winter season, to be harvested in November. But the large amount of rain would affect crop quality," a trader said.

"Meanwhile, sowing for the next winter-spring season could be late because it rained a lot and would take longer for the flood to go down."

In northern Vietnam, more than 22,000 hectares (54,300 acres) of rice were damaged in floods triggered by heavy rains last week. Traders estimated over 120,000 tonnes of crops were lost.Â

Due to low stocks, Vietnamese traders were gathering grains to ensure delivery of previous export contracts, pushing the prices of 5-percent broken rice to as high as $390-400 a tonne, free-on-board (FOB) Saigon, from $390-$395 last week.

"Prices are very high because we don't have much grain left from the last harvest," a trader in Ho Chi Minh City said.

In Thailand, prices fell due to low overseas demand, while the trend of supply is upwards despite rains and floods in some parts of the country, traders said.

Thailand's benchmark 5-percent broken rice was quoted at $375-$385 a tonne, free-on-board (FOB) Bangkok, down from $380-$388 a tonne last week.

"The rains and floods have not caused much damage to rice crops, but, alternatively have caused a fertile environment for crops in the future; so the trend of supply is on the rise," said a Bangkok-based rice trader.Â

The effects of Vietnam floods should increase prices in the short run and that would make Thai rice more competitive, traders said.

Bangladesh, which has emerged as a major importer this year after floods damaged its crops, imported more than 1 million tonnes of rice in July-October period, food ministry data showed.

Despite bulk imports, domestic prices have not budged, with officials and traders expecting more imports of the staple grain in the coming months.