The Philippines, the world's biggest importer of rice, scrapped a tender for 675,000 tonnes of rice on Monday but set an auction for 163,000 tonnes for the private sector later in the week. Vietnam's state-owned Vinafood II, the sole bidder at the tender, failed to supply a bank guarantee, said Ludovico Jarina, deputy administrator of Manila's National Food Authority (NFA), after opening the bid document.
"The bidding is a failure," he announced. International markets had been looking to Monday's tender as an important pointer on whether surging rice prices have peaked. "Today should have been a price-setting day but that did not happen," said one trader at the auction. "I think people will just sit back and wait." Jarina said the Philippines would hold another tender only when rice prices had climbed off their peaks.
Traders however said it may need to move soon because on Monday's tender was for delivery before July. But the food authority said it would hold a country-quota specific auction for private importers on May 9 for 163,000 tonnes of rice. The rice will be sourced from Thailand with 98,000 tonnes, China and India with 25,000 tonnes each and Australia with 15,000 tonnes, NFA officials said.
Private firms will be eligible to import the grain, they said. An import tariff of 50 percent on the rice would be waived, the officials said, although the NFA would impose a service fee. Typically however, private sector interest at these auctions is only lukewarm. Food administration officials also said Manila would ask for between 60,000 to 100,000 tonnes of rice from an East Asia rice fund.
The Philippines has helped propel world rice prices to record highs as it scrambles to boost its buffer stocks amid export curbs by some rice-producing nations. So far this year, the Philippines has spent around $1 billion buying 1.71 million tonnes of rice, mainly from Vietnam and Thailand, and has said it wants to buy up to 2.2 million tonnes of its national staple, the biggest purchase in a decade.
Manila paid an average of about $1,136 per tonne, cost and freight included, at its last auction in April, up 60 percent from an auction in March. At a tender in the beginning of the year, the average price was $474.41 per tonne. Agriculture officials have said the country has enough rice to meet demand but is building up buffer stocks ahead of a lean season for domestic rice beginning in July.