By Apornrath Phoonphongphiphat and Niu Shuping
BANGKOK/BEIJING (Reuters) - China, the world's biggest consumer and producer of rice, will probably buy up to 1.5 million tonnes of the grain this year as lower output and higher domestic prices burnish the allure of imports from neighbour Vietnam.
China's imports of around 600,000 tonnes of rice from Vietnam this year have already strengthened cash prices in top exporters Vietnam and Thailand, although ample stockpiles would probably prevent a sharper rise in prices, traders and analysts said.
"The amount of 1.0 million-1.5 million tonnes is reasonable, but I don't think China would have to buy up to 2 million-3 million tonnes as it has a certain amount of rice stocks," said Chookiat Ophaswongse, of the Thai Rice Exporters Association.
Substantial increases in rice prices could stoke food inflation as grain buyers reel under soaring wheat prices. Wheat has climbed 66 percent on the Chicago Board of Trade as a severe drought cuts output in the Black Sea region.
A similar surprise purchase of corn by China in April pushed up the price of U.S. corn futures by more than 6 percent. The buying marked China's first purchases of the feed grain from the United States in four years.
Thailand's benchmark 100 percent B grade white rice rose 4 percent to $475 per tonne on Wednesday from last week's $455, exporters said. Prices of Vietnam's 5-percent broken rice have now jumped to $400-$415 a tonne, free-on-board basis, from $375-$380 a week ago.
Buyers from southern China have been buying rice from Vietnam, the world's second largest exporter after Thailand, since May to offset a domestic shortfall.
Consistent rains coupled with lower temperatures from April to June caused some damage to early-season rice in provinces along the Yangtze River, said Cheng Shihua, head of the China Rice Research Institute.
But early-season harvest makes up less than 20 percent of China's total rice output while middle-season rice, which makes up 60 percent of output, grows normally now, Cheng told an official web site (www.china.com.cn).
Most of the rice has been transported across the land border and so is excluded from customs data, traders said.
China has not published its early-rice output but analysts expect output to decline by around two to 10 percent this year from last year's 33.2 million tonnes, analysts said.
China produced around 195 million tonnes of rice last year.
Vietnam rice price is 20 percent cheaper than Chinese domestic prices.
"We don't expect much shortfall, but China needs more imports to replenish its stocks, which have been declining over the past years," said one analyst with JC Intelligence Co. Ltd.
He estimated around one million tonnes would be imported this year.
While Thailand is trying to sell six million tonnes of rise from the government's reserves, Vietnam has sufficient stocks to satisfy both domestic consumption and exports.
"If China buys another several hundred thousand to 1 million tonnes of rice from Vietnam, it will not affect domestic food security," director Nguyen Tri Ngoc of the Agriculture Ministry was quoted by the Vietnam Agriculture newspaper as saying.
Ngoc, who heads the ministry's Crops Department, said the ample stocks included grain grown in Cambodia, where some Vietnamese farmers rented land for rice cultivation. (Additional reporting by Ho Binh Minh in Hanoi)
(Writing by Naveen Thukral; Editing by Clarence Fernandez)
