SINGAPORE — Rice exporters in Thailand and Vietnam are re-negotiating prices on sales contracts for around half a million metric tons for August shipments, two trade sources said, as India’s ban has tightened global supplies.

Exporters are rushing to cover rice supplies from farmers who have raised prices following a surge in the world market, putting millions of dollars’ worth of deals at risk.

Rice farmers and exporters who had bought shipments in advance are set to gain from tightening world supplies, while buyers are likely to lose despite booking cargoes before India’s announcement of ban as sellers renegotiate contracts to get higher prices.

Rice importers have no choice but to pay higher rates as sellers will default on contracts, given the substantial increase in prices of the staple, traders said.

India late last month banned white rice exports amid uncertainty over domestic production, heightening food supply worries among importers of the staple in Asia and Africa.

“Prices have gone up since India banned exports and it is difficult for suppliers to fulfil contracts signed at lower prices,” said one Singapore-based trader, with direct knowledge of talks.

Thailand and Vietnam, the world’s No. 2 and 3 exporters respectively, are estimated to ship more than one million metric tons of rice in August. India is the world’s biggest rice exporter accounting for around 40% of global supplies.

Global prices of key rice varieties shipped worldwide have climbed by about $80 per metric ton since India imposed the ban on July 20, they said.

Thailand’s 5% broken rice prices climbed to $625 per metric ton, versus $545 around two weeks ago, while similar variety from Vietnam has risen to $590 a metric ton as compared with $515-$525.

“The current prices are way higher than the contracted prices,” said one trader in Ho Chi Minh City. “The export price surge has resulted in a sharp rise in domestic paddy prices. Several traders are now rushing to sped up their purchases from farmers.”

While large exporting houses are likely to fulfil contracts, smaller trading companies are expected to default on shipments, traders said.

Importers, including the Philippines, are likely to seek direct deals with governments of exporting countries to ensure critical food supplies. — Reuters