They said no offers had been made since Hanoi imposed the ban on August 15 to maintain National food security.

"Farmers in the domestic market are holding rice and are not willing to sell," said one trader in southern Ho Chi Minh City.

He said five per cent broken grade rice was offered locally at four million dong ($287) per tonne with delivery in Ho Chi Minh City, which would put the possible export price at around $310 per tonne FOB Saigon Port.

Domestic quotations on 25 per cent broken grade were 3.6million dong ($259) a tonne, for an export price of around $280 per tonne FOB Saigon Port, he said.

Nine vessels were reported loading at Saigon Port this week for shipments of more than 100,000 tonnes of rice to Algeria, Brazil, the Philippines, Indonesia and Iraq under deals signed before the ban was imposed.

Traders said the Southern Food Company had also been buying rice and was in the process of chartering vessels to execute a 100,000 tonne government-to-government deal with Indonesia.

Talks over a separate state deal for Vietnam to ship 400,000 tonnes of rice to Indonesia have stalled. Despite the ban, Hanoi has allowed official export deals to take place if they have the permission of the prime minister.

The export ban has affected not only the market, but also food processing companies in an export processing zone (EPZ) in southern Vietnam, a local daily reported on Thursday.

The Saigon Times Daily said food processors in the Tan Thuan EPZ were finding it difficult to buy rice from the local market because sales to these firms were considered an export and thus prohibited under the ban.

One rice dealer said companies in EPZs might have to apply to buy substantial quantities of rice. Dealers also said Vietnam's thin stocks and high prices had kept the country out of the game in trying to compete with India for rice deals to flood-stricken Bangladesh.

"Indian rice is much cheaper than Thai or Vietnamese rice. We can't compete," said the trader in Ho Chi Minh City.

An Indian trade official said on Wednesday that India expected to boost sales to Bangladesh and was hopeful of a breakthrough in exports to Indonesia.

Vietnam has sold an estimated 2.895 million tonnes of rice in the first eight months of this year, an increase of 22.5 per cent over the same period last year, according to official statistics. The country, one of the world's biggest rice exporters, has set a export target of four million tonnes in 1998.