Philippines to stay out of rice market until after polls

Rice prices in top exporting countries Thailand and Vietnam may fall more as the Philippines may not tender for new supplies until after national polls in May, sources said on Friday. The absence of demand from the world's biggest rice buyer, the Philippines, would further weigh on Asian rice prices, with benchmark Thai rice already $100 off a December peak of $630 a ton, which was boosted by several tenders in Manila in 2009. An industry group in Vietnam, the world's second largest rice exporter after Thailand, has capped the price of 5% broken rice at $440 a ton, free-on-board, hoping it could come to the next Philippine tender with a high offer. In the absence of demand from its main customer, the Philippines, Vietnam's rice prices are likely to slip further with the major harvest peaking in two weeks, traders said. "Given the possibility of the Philippines having no tenders (until after the May elections), prices in Vietnam could drop," said an exporter in the Mekong Delta province of An Giang. "Exporters are not buying strongly now because they do not have buyers, they lack space in their warehouses and they also do not have sufficient funds," said a foreign company trader in Ho Chi Minh City. All Philippine government agencies are barred from seeking contracts ahead of elections to discourage corruption and the potential use of funds for campaigning. The ban takes effect from March 26 to May 10, the day of the elections, an official who is part of the rice bidding committee at the National Food Authority (NFA), told Reuters. The NFA can seek exemption from the ban in an immediate rice shortage or a crisis situation emerges, said another official. Manila's state-held rice stocks stand at 1.209 million tons, good for 33 days consumption, according to NFA. The Philippines's 2010 imports stand at a record 2.45 million tons. The country contracted 2.25 million tons from tenders in November and December last year for delivery until June and also allowed private firms to bring in 200,000 tons until Sept. 15. An NFA official said last month the country may import around 800,000 tons more if a dry spell hits crops adversely.