Vietnam may offer lower rice price for Philippines

With the Philippines to reopen tenders for the procurement of 250,000 tons of rice tomorrow after rejecting the prices offered by Vietnam and Thailand, Vietnam may lower its price further this time.

Farmers in the Mekong Delta region harvest rice. Vietnam will likely lower the rice price offers to win the bid to supply the Philippines - Photo: Trung Chanh

This country invited tenders for supply of 250,000 tons via the government-to-government (G2G) scheme, including 200,000 tons of 25% broken rice and 50,000 tons of 15% broken rice. However, Vietnam and Thailand as the two participating countries were eliminated as their prices were above the reference prices of the Philippines.

In particular, the reference prices announced before the tender were US$483.63 per ton of 15% broken rice and US$474.18 per ton of 25% broken rice.

Meanwhile, Vietnam offered the respective prices of US$540 and US$532 per ton. As for Thailand, it did not bid for 15% broken rice, but its price offer for 25% broken rice was US$530 per ton.

A second chance was given to Vietnam and Thailand right after the first round, but the offered prices were still way higher than the reference levels despite being lowered. Specifically, Vietnam’s prices were cut by US$10 and US$11 per ton respectively, whereas Thailand offered US$520 per ton for 25% broken rice.

Nguyen Dinh Bich, a rice market analyst, told the Daily that it is likely that Vietnamese rice traders could reduce the prices. How much Vietnam would lower its offers depends on Thailand, he noted.

If Thailand’s price is slightly higher than that of Vietnam, the latter will lower the price further to win the bid, he said.

Nonetheless, the question is how close Vietnam’s prices will be to the Philippines’ reference levels, but the cuts would be small given high prices on the domestic market. 

Finished IR 50404 rice, the type of rice often used for 25% broken rice contracts, is traded locally at VND9,400 per kilogram. With an exchange rate of VND22,700 per dollar, the domestic price is some US$414 per ton of IR 50404 rice and around US$450 per ton of 15% broken rice.

This means with related costs included, Vietnam’ potential price cut cannot be deep.

The Philippines will apply a new reference price to the tender set for tomorrow. Such a price will be calculated based on world rice market developments.