Rising global demand has forced the Philippines to import rice at a much higher price then it intended doing.
Manila, which is now the world's biggest rice importer, opened the bidding yesterday for 600,000 tonnes of 25-per-cent rice. Vietnam is likely to win an order for 300,000 tonnes, Thailand for 100,000-200,000 tonnes and Pakistan for about 100,000 tonnes.
The prices offered by Thailand and Vietnam are between $598 and $648 a tonne, including cost, insurance and freight. These prices are considerably higher than the $470 to $488 agreed at a tender earlier this month in the Philippines.
Chaiyaporn, one of Thailand's top five exporters, should win an order for about 100,000 tonnes, while Asia Golden Rice is waiting to hear how big an order it will win.
Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said the Philippines might buy 500,000 instead of 600,000 tonnes in order to keep within its budget.
"Manila is aiming to buy rice at $540-$600 a tonne. However, all other bidders are offering a higher price, which would force the Philippines to stick with just 500,000 tonnes," Chookiat said.
Manila is expected to open two more bids for 600,000 tonnes each on December 8 and in the middle of the month.
Asia Golden Rice president Sombat Chalermwutinan said this bidding would push rice prices considerably higher because there is a shortage of supply.
"Thai rice exporters may not benefit from rising prices, because there is a low supply in the market," he said, before urging the government to release some of its stockpiles. He said that if the government did not release rice, Thai export volume could fall over the next few months.
According to the exporters' association, Thai exports rose by 50.68 per cent to 490,137 tonnes from November 1 to 20, though export volume had dropped by 17 per cent to 7.69 million tonnes from January 1 to November 20.
Sompong Kittireanglarp, president of exporter Ponglarb, said the Philippines bidding should not push prices up significantly because Thailand had only won a small order. He too urged the government to release its stockpiles.
Meanwhile, the Commerce Ministry announced new per-tonne reference prices for December 1-16, with paddy jasmine at Bt13,720, paddy white at Bt9,242 and sticky jasmine rice at Bt9,591.
Permanent secretary Yanyong Phuangrach said exporters were also pushing for the government to release its stockpiles, and the ministry would have to consider its options.
According to Bloomberg, Vietnamese suppliers, including Vietnam Southern Food, offered to sell rice at $598 to $697 a tonne at the tender for 600,000 tonnes, said the Philippines' National Food Authority deputy administrator Vic Jarina.
The offers compare with the $468.50 to $480 agreed at a November 4 tender.
The Philippines advanced rice bidding for 2010 after storms damaged local output, worsening the domestic shortfall.
India, the second-largest grower and consumer, might become a net importer next year for the first time in more than two decades after drought cut local production.
Everybody is waiting for this tender because it will decide the price for purchases that follow, said Rakesh Singh, a trader at Emmsons International in New Delhi.
Emmsons was not one of the firms offering supplies at yesterday's tender, which may be awarded within a week.
Rice futures in Chicago have jumped 37 per cent from this year's low of $11.195 per 100 pounds and traded today at $15.34. The Thai benchmark price, for 100 per cent grade-B white rice, was set last week at $590 a ton, up from $561 a week before. The Thai price of the grade sought by the Philippines, 25 per cent broken white rice, was set at $466 a tonne on Nov. 25.
Higher prices could spur inflation across Asia and Africa, and may stoke unrest if the poor are unable to afford food. Rice reached a record high in 2008 amid trade curbs by suppliers, including India and Vietnam, fuelling concern among policy-makers that there was a global food crisis.
Vietnam Southern offered 600,000 tonnes in yesterday's tender, and the suppliers offered as much as 1 million tonnes, Jarina said. The Philippines has announced four tenders for 2010 supplies and is seeking a total of 2.05 million tonnes.
Global rice output is forecast to drop 3 per cent from a year earlier to 432 million tonnes in 2009-2010, resulting in a shortfall of 4.75 million tonnes, according to the US Department of Agriculture.
Source: The Nation
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