Shipments from Vietnam last year hit the lowest level since 2009. Now experts warn market trends are not favorable.
Abundant global supplies, potentially slow trade and increased competition are putting more pressure on Vietnamese rice exporters, who just finished 2016 on a sour note.
Vietnam’s rice shipments last year fell 25.8 percent to 4.9 million tons, the lowest since 2009, according to the agriculture ministry, which added that revenue dropped 21.2 percent to $2.2 billion.
Last year, the world’s third largest exporter of the grain had to revise down its annual target twice.
The agriculture ministry has attributed the sharp downturn to prolonged drought and saltwater intrusion in the Mekong Delta, where nearly half of the country’s rice is grown. Vietnam’s total rice output shrank 3.3 percent to 43.6 million tons last year.
Apart from the lasting impacts of adverse weather conditions, industry experts said rice exports this year can remain low due to ample supplies on the global market and increased competition among the world’s top exporters.
The U.S. Agriculture Department said in its 2017 outlook report that the world’s rice stock will hit a 15-year high of more than 120 million tons, sufficient for 92 days of global consumption.
Besides, the global rice trade in 2017 is expected to decrease by 2 percent from 41.3 million tons to 40.5 million, according to the department.
The International Grains Council said rice exports from Thailand and India could still grow significantly in 2017. These two countries, the world’s largest rice suppliers, will dent the market share of Vietnam.
Given the fact that Thailand plans to clear its state stockpiles, estimated at around 9 million tons, by the end of 2017, Vietnamese rice will become even less competitive in major markets in Asia.
Customs data showed that in the January-October period last year, Vietnam’s rice exports dropped 25 percent year-on-year to 4.54 million tons. In contrast, India and Thailand performed relatively well. In the same period, Thailand exported 8.7 million tons, up 1.5 percent year-on-year.
Meanwhile, China, Vietnam’s top buyer, reduced its imports from Vietnam by 20 percent in 2016. Vietnam has relied on China as its major customer for the staple grain. China’s purchases account for nearly 35 percent of Vietnam’s exports.
Experts have warned that with its own abundant stockpiles of around 46.8 million tons, China could cut cross-border imports from Vietnam to about only 1 million tons for the entire 2017.