Freight rising by more than 30 percent for each tonne of rice from Vietnam to Africa, coupled with a domestic petrol price hike slowed exports, traders said. Higher freight would make it difficult for the Philippines to buy 300,000 MT of rice via a tender next month at a good price while Vietnam, a key supplier to Manila, would not win the bulk of the tender.

The freight rise has increased costs to trading companies, several of, which made losses because they signed contracts with Vietnamese exporters before the rate rose. Several African countries buy rice from Vietnam. "Vietnamese rice going to Africa is frozen," a trader in Ho Chi Minh City, Vietnam's busiest grain trading market. On an average freight to Africa has been $20 higher in the past two months. Traders said the distance and the freight hike have given Pakistan and India an advantage in rice sales to Africa.

Another dealer at a foreign firm in Ho Chi Minh City said Africa-bound freight has risen 37.5 percent to $110 per tonne now from $80 in the first quarter of this year. "The rice stock is ample while loading has been slow because it's been difficult now to charter a vessel given the higher freight," he said.

"Destinations such as Indonesia and the Philippines are also facing this problem with higher freight, with $10 a tonne more for the Philippines," he added. This week 10 vessels have been loading 108,600 tonnes of rice at Saigon Port for Iran, Cuba and Indonesia. Six of the 10 this week is their second week docking at the port, partly because of the freight hike's chain effect, traders said.