Vietnam, the world's third biggest exporter of rice, has started buying the grain from rival India for the first time in decades after local prices jumped to their highest in nine years amid limited domestic supplies, four industry officials told Reuters.
The purchases highlight tightening supplies in Asia, which could lift rice prices in 2021 and even force traditional buyers of rice from Thailand and Vietnam to switch to India - the world's biggest exporter of the grain.
Indian traders have been contracted to export 70,000 tonnes of 100% broken rice for January and February shipments at around $310 per tonne on a free-on-board (FOB) basis, the industry officials say.
"For the first time we are exporting to Vietnam," B.V. Krishna Rao, president of the Rice Exporters Association, told Reuters on Monday. "Indian prices are very attractive. The huge price difference is making exports possible."
Dwindling supplies and continued Philippine buying have lifted Vietnamese rice export prices to a fresh nine-year high.
Vietnam's 5% broken rice is offered around $500-$505 per tonne, significantly higher compared to Indian prices of $381-$387.
The shrinking supplies will heighten concerns about food insecurity with sub-Saharan Africa among the areas where import demand has been increasing due partly to population growth.
Chronic and acute hunger is on the rise, impacting vulnerable households in almost every country, with the COVID-19 pandemic reducing incomes and disrupting supply chains, according to the World Bank.
Traders said the global pandemic has also prompted Vietnam and other countries to stockpile rice.
Vietnam announced last year it would stockpile 270,000 tonnes of rice to ensure food availability amid coronavirus-driven supply chain disruptions worldwide.
Traders in Vietnam said the rice from India had been stockpiled in government reserves since 2016/17 and its relatively cheap price reflected low quality.