The rice trade between the Philippines and Vietnam is facing disruption as a sharp decline in prices has led to delays and renegotiations of significant purchases. Importers in the Philippines, one of the world’s largest rice buyers, have put off acquiring approximately 350,000 tonnes of Vietnamese rice, as prices have fallen dramatically in recent weeks.

Contracts signed late last year for fragrant rice were priced at around $620 per metric tonne, free on board. However, the current price has dipped to approximately $500 per tonne, prompting buyers to reconsider their commitments, as reported by Reuters.

This sudden drop in rice prices comes just as the new harvest season is about to commence in Vietnam and across other regions of Asia, which is causing turbulence among exporters. The price fluctuations have left many traders in a difficult position, with some fearing defaults on pre-existing deals. As one source close to the negotiations pointed out, “Buyers are now unwilling to take the expensive rice.”

Fluctuations in price and supply have been significant in recent years in Southeast Asia as the region comes out of COVID restrictions on travel and transportation and as some nations limit exports to help build up reserves at home.

The Philippines government’s recent move to declare a food security emergency has further complicated matters. Despite a global reduction in rice prices and tariff cuts last year, the cost of rice within the country remains stubbornly high. This has prompted the government in Manila to take action to ensure a stable supply and more affordable prices for its citizens.

The global rice market, meanwhile, has been undergoing a significant shift. After India eased export restrictions in late 2023, global prices began to slide. Indian prices recently hit their lowest levels since June 2023, and Vietnamese prices have dropped to their weakest since September 2022. The rice market had seen a price surge in 2023, triggered by India’s restrictions due to poor monsoon rains. However, with Indian rice inventories now at record highs, there is the potential for increased exports, which could further impact global pricing trends.