By Luzi Ann Javier and Cecilia Yap
Nov. 23 (Bloomberg) -- Rice imports by the Philippines, the world’s biggest importer, may account for as much as 10 percent of next year’s global trade after storms destroyed crops, draining supplies and driving prices higher.
Rice futures advanced today after the Southeast Asian nation said it may purchase a record 3 million tons next year in a “worst case scenario,” National Food Authority spokesman Rex Estoperez said today. Global trade is estimated by the U.S. Department of Agriculture to be 29.5 million tons in 2010.
Rising Philippine imports may extend a rally in prices, which have jumped 37 percent from this year’s low in March, as drought in India slashes production, fueling speculation that the country will be a net importer for the first time in more than two decades. Rice surged to a record last year as concerns over food shortages prompted countries like India and Vietnam to curb exports, sparking food price riots across the globe.
“When you get into a tendering procedure, there is always a multiplier effect which artificially pushes the market up,” Shahzad Naqi, chief executive officer of Peak Holding Pvt., a Karachi-based rice exporter, said by phone today. “Whenever there are 10 suppliers offering 100,000 tons each, they are drawing down” supplies, he said.
The Philippines issued its fourth tender today for next year’s rice supplies, seeking offers for 600,000 metric tons on Dec. 15, according to a National Food Authority notice in the Philippine Daily Inquirer newspaper.
The country is advancing imports after recent storms destroyed 1.3 million tons of rice. The latest tender takes planned purchases for 2010 so far to 2.05 million tons.
‘Multiplier Effect’
Imports may be to 2.4 million tons next year, from 1.78 million tons this year, if next year’s first harvest meets the government target, Estoperez said.
“You never know what will happen next year; there could be another typhoon or El Nino,” taking the nation’s imports to 3 million tons, Estoperez told reporters in Manila today.
“We’re taking advantage of the better price,” National Food Deputy Administrator Vic Jarina said today. “Other countries are not in the market yet and the price is good. We foresee maybe next year India will come in and prices will go up.”
Rice futures for January delivery traded in Chicago advanced as much as 1 percent to $15.32 per 100 pounds at 5:43 p.m. in Singapore. The price reached a record $25.07 in April 2008. The export price of Thai 100 percent grade-B white rice, the regional benchmark, has gained 6.9 percent to $561 a ton from this year’s low of $525 in October.
Indian Imports
India won’t import rice because it has adequate supplies to meet demand, Trade Minister Anand Sharma said on Nov. 20, days after saying the country was in talks with Thailand and Vietnam, the two biggest exporters, to buy grain.
Thailand’s Prime Minister Abhisit Vejjajiva said Nov. 18 that India was seeking to buy a total 2 million tons in government-to-government contracts.
Philippine imports of 2 million tons may be enough to cover the nation’s requirements at the start of 2010, said Jarina, who chairs the committee that buys rice for the government. The inter-agency panel may decide to purchase more depending on the outlook for crops.
Still, three record tenders scheduled between Dec. 1 and Dec. 15 totaling 1.8 million tons may test exporters’ ability to draw enough supplies to meet Philippine needs, Naqi said.
“Either they don’t get the total quantity, or they get a higher price, or they may go to government-to-government negotiations,” Naqi said, referring to the tenders.
The National Food Authority wants the 25 percent broken white rice delivered between February and May next year and has set a budget of 15.26 billion pesos ($325 million), the state- run food buyer said.
The Philippines purchased 250,000 tons in a tender earlier this month.
To contact the reporters on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net; Cecilia Yap in Manila at cyap19@bloomberg.net
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