Positive growth projected for rice exports until the end of the year

Vietnam's rice exports increased sharply in terms of both volume and value during the first half of 2023. According to the Department of Quality, Processing and Market Development under the Ministry of Agriculture and Rural Development, Vietnam's rice exports reached 4.27 million tons within the first six months of 2023, resulting in a turnover of 2.3 billion USD. This is an increase of 22. 2% in volume and 34.7% in value over the same period in 2022.

The stronger growth in value compared to volume was caused by a sharp increase in the average export price of Vietnamese rice as more businesses are contracted to export fragrant rice at high prices in 2023.

According to Mr. Nguyen Van Don, Director of Viet Hung Co., Ltd located in Tien Giang province, the company has exported approximately 70,000 tons of rice since the beginning of the year, and 15,000 additional tons are scheduled for export through contracts. Viet Hung's main markets include China, the Middle East, the Philippines, Africa, etc. Viet Hung's shipments of fragrant rice have relatively higher prices compared to other rice variety that it offers. Namely, Jasmine rice is priced at 585 USD per ton, and DT8 rice is priced at 565 USD per ton.

Most notably, fragrant rice exported to the EU and Korea has a considerably higher price. According to rice exporters, rice businesses have exported nearly 40,000 tons of fragrant, high-quality rice to the EU, South Korea in the first half of 2023; with the highest price being 1,250 USD per ton, and the lowest being 700 USD per ton. As a result, the average export price of rice reached 539 USD per ton within the first half of 2023, which is an increase of 10.2% over the same period in 2022.

Despite the difficulty in the export of various agricultural, forestry and fishery products, rice continues to be one of the few commodities with positive growth. The growth momentum of rice exports is forecast to continue until the end of 2023.

According to VFA, Vietnam's rice exports will continue to experience strong growth, especially in the second half of the year due to rising demand from major markets such as China, the Philippines, Malaysia, etc. Indonesia is will continuously open bids to import additional rice over the next few days, starting with 300,000 tons. Vietnam's rice exports to the Indonesian market saw a strong growth of 1,498% in the first half of 2023.

According to the Ministry of Agriculture and Rural Development, Vietnam's rice exports will continue to grow until the end of the year as global rice consumption increases to a record high in the 2023-2024 crop year, and global rice reserves decline to the lowest level in recent years.

Similarly, rice production in Vietnam is forecast to be favorable throughout the remainder of the year. According to the plan by the Ministry of Agriculture and Rural Development, Vietnam will cultivate 7.1 million hectares of rice in 2023. The expected output is 43.11 million tons, which is an increase of 0.4 million tons compared to 2022. So far, the total rice area in Vietnam is approximately 5.4 million hectares, or 76.6% of the plan. The remaining area of 1.65 million hectares for the Autumn-Winter rice crop in the Mekong Delta and the Summer rice crop is expected to finish planting by October 2023.

The harvested area is approximately 3.3 million hectares, reaching 46.8% of the plan. Accordingly, the rice yield is 21.8 million tons including 20 million tons from the 2022-2023 Winter-Spring crop and 1.8 million tons from the 2023 Summer-Autumn crop. It is expected that the remaining rice area of 3.75 million hectares, which can produce a yield of 21 million tons, will be harvested until late 2023 or Janurary 2024.

The Mekong Delta, which accounts for over 90% of Vietnam's rice exports, will produce an estimated yield of more than 24 million tons in 2023. This volume will be a large source of commodity rice for processing and exporting companies.

According to reports of the Vietnam Food Association in early July, Vietnam is selling 5% broken rice at a price of 513 USD per ton and 25% broken rice at a price of 493 USD per ton. Consequently, Vietnam's 5% broken rice is priced at 1 USD per ton higher compared to that of Thailand, whereas 25% broken rice is 9 USD per ton higher compared to its counterpart.

On the other hand, the export price of Vietnamese rice is considerably higher compared to that of two other major exporting countries, India and Pakistan. India's 5% broken rice is currently priced at 483 USD per ton and Pakistan's at 488 USD per ton; India's 25% broken rice is priced at 463 USD per ton and Pakistan's at 458 USD per ton.