Hanoi/Manila, Aug 20 - Vietnam may have struck an initial pact to sell 400,000 tonnes of rice to the Philippines, an industry official said on Thursday, in a move that could stem a fall in Vietnam's rice prices and put it on track to meet a goal of 7 million tonnes of rice exports this year.
Last month traders said Vietnam was discussing the sale of up to 500,000 tonnes of rice to the Philippines, the world's largest importer of the grain, possibly carrying its exports to a new record of 7 million tonnes.
Traders said rice prices were falling in Vietnam during the peak of a Mekong Delta harvest while export demand was thin, so the country needed to secure a large deal to help arrest the price fall.
"What you heard about the volume is correct," Nguyen Tho Tri, deputy chairman of the Vietnam Food Association said, when asked to confirm that the deal with Manila involved 400,000 tonnes.
A Manila-based trader from a global commodity firm said earlier an agreement was reached in principle for between 300,000 tonnes and 500,000 tonnes and delivery could be late in the year.
Another trader in Vietnam said the deal priced 400,000 tonnes of 25 percent broken rice at $460 a tonne, cost and freight (C&F) basis, for shipment in November and December.
Traders said such an agreement would be good news for Vietnam because it would help shore up the falling rice price there.
"Vietnam needs any good news of a large rice deal to help support the price in the Mekong delta," said a Vietnamese dealer at a foreign firm, who asked not to be identified.
In July Manila opened its first tender this year and bought 75,000 tonnes of milled rice with the lowest offer at $472.72 a tonne, C&F, for Pakistani rice. The next two lowest offers were for Thai rice at $486.28 and $487 a tonne, C&F.
Traders said the Philippines used pricing details at the tender to negotiate the larger deal with Vinafood 2, Vietnam's largest rice exporter.
CORN IMPORT
"The Philippines has been buying millions of tonnes of rice from Vietnam, so in exchange we would buy corn under a trade deal between ASEAN members," Tri said.
Vietnam has started talking with the Philippines to buy between 500,000 and 800,000 tonnes of corn a year, Tri said, adding that the first imports could take place early next month.
The expected purchase compares with a forecast of 700,000 tonnes of corn Vietnam could import this year, up from 610,00 tonnes in 2008, the U.S. Department of Agriculture attache in Vietnam said in a report in May.
Traders said both sides were keeping the deal secret to avoid any price surge that could hurt the exporter's profit and affect loading process.
Rice prices in Vietnam have been easing, even though industry body the Vietnam Food Association has asked members to start stockpiling 400,000 tonnes of milled rice to ensure farmers make profits.
The association had also cut the floor on rice export prices by between 7 and 12.5 percent to boost exports, Tri said.
The 5-percent broken rice was cut to $400 a tonne, free on board basis, from $430 since July 2, while the 25 percent broken rice was also cut to $350 per tonne from $400 previously.
The purchase of another 500,000 tonnes would boost Manila's rice imports this year to 2.275 million tonnes, just a little shy of the record 2.3 million tonnes it imported last year, which sent grain prices to record levels.
A senior official from the Philippines' grain importing arm, National Food Authority, said in early July the country has the option to import up to 2.4 million tonnes of rice this year.