Singapore, Oct 13 - With its main rice crop hit by typhoons, the Philippines has jumped into the market two months earlier than usual to secure imports for the new year, but the move is unlikely to spark a rush by other buying nations or a big price rally, thanks to bulging world stocks.
By scheduling deliveries from January, the world's biggest importer is signalling it does not see an immediate shortage, but traders and analysts say Manila is keen to ensure enough supplies in the local market ahead of the elections in May. "I don't think it's going to send the market into a frenzy just yet. There's plenty of rice and exporters would be happy to see this demand arrive," said V. Subramanian, vice president at The Rice Trader, a rice trade publication.
Manila is holding a tender on Oct. 30 for the supply of 250,000 tonnes of rice, its first purchase for 2010, for arrival between January and April.
Analysts say any shortage of the staple would reflect badly on administration candidates ahead of national elections.
The early start to Manila's buying programme, which could eventually bring in 2 million tonnes of rice for 2010, up 13 percent on this year, should help traditional suppliers Thailand and Vietnam, the world's top two exporters, to trim hefty stocks.
But it is unlikely to ignite the kind of panic in the world grain markets seen in 2008 when big purchases by Manila and export curbs by producers briefly sent benchmark Thai rice trebling to a record $1,080 per tonne.
"If their intention was to plug the shortfall caused by the damaged crops, then they should be looking at an earlier shipment," said a trader from a global commodity firm in Manila.
"On the other hand if they opt for arrival this year, it will trigger chaos in the market. By scheduling arrivals from January onwards, the National Food Authority is saying that, 'Yes, we're short, but we're still comfortable."
TYPHOON DAMAGE
Around 500,000 hectares of riceland were affected and nearly 840,000 tonnes of paddy -- equivalent to more than 15 days consumption -- were lost as Typhoons Ketsana and Parma pounded the main rice-growing Luzon island from late September, with more than 650 people killed in landslides and flooding.
The typhoons hurt the Philippines' hopes to produce 6.48 million tonnes of paddy rice in October to December, usually the year's bumper crop, to boost annual output to an all-time high of 17.45 million tonnes.
The country's rice imports this year dropped to 1.775 million tonnes, from a record 2.3 million tonnes in 2008, most of which was secured via an intergovernment deal with Vietnam.
That helped boost the government's milled rice stocks, which stand at around 1.1 million tonnes, good for 31 days, compared to just over 750,000 tonnes around the same time last year.
"The Philippines has played it quite smart this year. It's unfortunate that their crop was damaged, otherwise they wouldn't have to jump into a tender just so soon," said The Rice Trader's Subramanian.
A repeat of the 2008 chaos is unlikely, Subramanian said, with other big rice importers such as Bangladesh, the world's second-largest, importing far less this year after a bumper harvest and a surge in domestic stocks.
Analysts and traders say the Philippines could still secure the bulk of its rice imports via government-to-government arrangements, seen as a quieter route to avoid price spikes.
VIETNAM HAS UPPER HAND
With major exporter India still off the market, Vietnam could win to supply as much as 170,000 tonnes at the tender because of its lower prices and ample stocks following a key crop harvest last month in the Mekong Delta food basket, traders said.
India has banned non-basmati rice exports since last year to rein in rising domestic prices and stave off shortages at home, but a bumper harvest encouraged it to allow sales of specified quantities to some countries.
Thailand could secure 50,000 tonnes and Pakistan the remaining 30,000 tonnes, traders said.
The 25 percent broken white rice, the grade Manila is buying, was quoted at $350 a tonne in Vietnam and $420 a tonne in Thailand, both on a free-on-board basis, traders said.
Bangkok is sitting on record stocks of around 6 million tonnes of milled rice courtesy of a government intervention plan aimed at improving farmer returns. The scheme has since been modified to ease bulging inventories and to try and make Thai exports cheaper to compete with No. 2 shipper Vietnam.
"The new intervention system would bring prices down to the level that reflects real demand and supply that could provide room for Thailand to compete with Vietnam," said Vichai Sriprasert from the Thai Rice Exporters Association.
Pakistani exporters will also participate in the Manila tender, said Safder Mehkri, chief executive of grain exporter Conwill Pakistan Pvt Ltd, adding he believes it could start off a series of tenders from the Philippines.
"The fact that Manila is coming into the market in October instead of December, when they conventionally start buying for next year, means there will be a slight support to world prices," said Mehkri.
"The global market has factored in 2 million tonnes for the Philippines, and if they don't come back with another tender in December, they surely will do so in January," he added.