Vietnam raises rice price, Manila sets Q1 buying plan
Vietnam raised the minimum price of its main rice export grade on Monday and the Philippines, which often buys that grade, decided to advance its 2011 import programme, perhaps afraid prices could rise further.
The Vietnam Food Association (VFA) raised the floor for the 25 percent broken rice by 1 percent to $495 a tonne from the $490 in place since Dec. 27.
"The move has created a new price level in preparation for negotiations with the Philippines," said a Vietnamese trader with a foreign company in Ho Chi Minh City.
Last month the two Southeast Asian governments extended until 2013 an agreement over rice supplies in emergency situations.
Vietnam's 1 percent price increase, versus the almost 14 percent rise last month partly to meet demand from Indonesia which more than doubled its grain imports last year, came before a major harvest in February that is expected to keep Asian rice markets stable.
Vietnam is the world's second-biggest rice exporter after Thailand, while Manila is the biggest importer of the grain.
The Philippines could buy rice from Thailand and even Cambodia as well as Vietnam, said Angelito Banayo, administrator of the country's National Food Authority.
"Realistically, we could wait until probably the second quarter because of our huge inventory. But there is no certainty that prices will go down in the second quarter," Banayo told Reuters.
"We need to buy now or within the first quarter," he said, adding he was concerned rice prices would rise further as consumers seek substitutes after wheat prices surged.
The new minimum price for Vietnam's 25 percent broken rice, which will apply to shipments in January and February, means the grade has risen 6.5 percent over the past year. It will help put a floor under domestic prices next month when harvesting of the major crop begins.
CHANCE FOR THAI, CAMBODIAN RICE
The Philippines imported a record of 2.45 million tonnes of the grain to meet its 2010 needs, mostly from Vietnam. Manila has said it would buy no more than half that volume this year.
Exporters in Thailand, whose main crop is reaching a peak, said the timing of the Philippine plan was good for them, although they were not sure of selling big amounts.
Thai rice prices look a bit cheaper than Vietnamese prices, given the new floor in Vietnam, but traders in Thailand said Vietnamese exporters were likely to win the bulk of the tender as they could source cheaper rice from Cambodia.
"I expect Thai exporters to win a combined 100,000-200,000 tonnes at best," said Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association.
Thai 25 percent broken rice was quoted on Monday at $470 a tonne, steady versus last week and around 3 percent down from recent weeks. Thailand's benchmark 100 percent B grade white rice costs $535 a tonne, having fallen 13 percent in 2010. Chookiat said the Philippines usually limited private exporters to bids of a maximum 20,000 tonnes each at tenders.
MAJOR HARVEST IN FEBRUARY
The VFA left the floor for Vietnam's 5 percent broken rice unchanged at $520 a tonne, free on board Saigon Port.
Last Tuesday, the food association said demand from the Philippines could reach 1.5 million tonnes this year, and Vietnam hoped to secure contracts for 1 million tonnes.
Vietnam could have 6.6 million tonnes of rice available for export this year, so shipments could be higher than an initial estimate of 6.0 million tonnes, a state-run newspaper reported last week.
The floor price rise comes shortly before Vietnam starts harvesting its largest, winter-spring crop, late next month and traders had expected domestic prices to soften as supply increased.
Ample supplies from Thailand and Vietnam are likely to keep prices in check in the first quarter, sparing Asia's staple food from the surge in commodity prices that has pushed food inflation up policymakers' agenda.
Cuba, another traditional buyer of Vietnamese rice, said on Friday that its production of the grain fell 12.2 percent last year to 247,400 tonnes, which could lead to higher imports this year.
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