Philippines eyes record 600,000 T rice tender

The Philippines is coming back to the market for the second time in a month with a tender for 600,000 tonnes of rice in December, its largest ever single buy that could see prices spike.

The world's largest rice importer is securing stocks after storms damaged croplands in the main rice growing areas about a month ago. Traders say it is seeking to ensure there is enough of the national staple ahead of general elections in May.

State-run National Food Authority said on Monday it is seeking 600,000 tonnes of 25 percent broken white rice at a tender on Dec. 1. It is the first time the agency has tendered for a volume this big, according to NFA data.

The grain is scheduled for arrival between February and May 2010.

"This is such a huge amount of rice, and that should drive up the price globally," said Chookiat Ophaswongse, president of the Thai Rice Exporters Association.

"At the moment, the price could go up 5-10 percent easily for any rice grade," said Ophaswongse, citing the "psychological impact" of the sizeable volume that Manila is buying.

The agency has set a budget of 15.264 billion pesos ($325 million), or around $541 a tonne, cost and freight, at current exchange rates.

NFA awarded two contracts on Friday for supply of a total 250,000 tonnes of the same rice grade to Vietnam's Vinafood 2 and Korean trading firm Daewoo International Corp after a tender on Nov. 4.

The lowest bid at last week's tender, submitted by Daewoo, was $468.50 a tonne, C&F, well below NFA's budget of around $536 a tonne based on exchange rates at that time.

Prices for 25 percent brokens have already gone up about 10 percent since last week's tender, and could spike further ahead of the December bidding, said Tae-Hyun Yun, manager at Daewoo International in Manila.

"We will join this December tender," said Yun, adding the trading house will source the grain from either or both Thailand and Vietnam.

For next month's tender, NFA said source countries should be Thailand, Vietnam, China, Pakistan, Australia, India and the United States.

Maximum volume from Pakistan, U.S., Australia and India will be 100,000 tonnes, and up to 600,000 tonnes from Vietnam, China and Thailand, the agency said.

Ophaswongse said the market expects the Philippines to import between 2.5 million and 3.0 million tonnes of rice for 2010.

"The whole world knows that the Philippines will need more rice next year after a couple of storms, and it's an election year.

"Those two factors will probably make them buy a bit more," he said.

The Philippines imported 1.775 million tonnes of rice for 2009, including 1.5 million tonnes bought via an inter-government deal with Vietnam.

That was down from a record 2.3 million tonnes in 2008 which helped push prices of the grain to all-time highs above $1,000 a tonne.