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Vietnam may ship 700,000mt rice to Philippines

Vietnam is expected to sell 700,000 tonnes of rice to the Philippines between now and the end of the year, said Reuters, citing a local news report.

The imports would take to 2.2 million tonnes the total grain purchase from Vietnam by the Philippines, the world's largest rice importer, Deputy Minister of Industry and Trade Nguyen Thanh Bien told the Rural Today newspaper, run by the Vietnam Farmers' Association.

Bien did not give exact time or price details but the quantity is well above market expectations after top export firm Vinafood 2 started talks last month to sell up to 500,000 tonnes to the Philippines.

He said rice prices could drop slightly in the second half of this year, partly due to large stocks in Thailand, the world's largest rice exporter.

Thai government rice stocks have risen to the equivalent of 7 million tonnes of milled rice, the highest ever, which could add to the downward pressure on prices, a senior official and exporters said on Thursday.

If Vinafood 2, assigned by the government to handle rice demand from the Philippines, can reach a sale agreement, other Vietnamese exporters will not be allowed to sell rice to foreign firms that compete in the Philippine market.

A deal with the Philippines will help stop domestic prices from falling in Vietnam, where the harvest of a huge crop in the Mekong Delta has been peaking, traders said. The harvest is expected to end next month before seasonal floods arrive.

The sale could also help put Vietnam on track to achieve a record export volume this year of up to 7 million tonnes as expected by the government.

The Philippines bought 1.5 million tonnes of Vietnamese rice in January, bringing calm to a market which last year saw rice prices shoot to record levels.

Vietnam will stop firms exporting rice to certain destinations when such sales would be in competition with government contracts handled by the top two state-controlled exporters, according to rules issued by an industry body.

From August 10, exporters will not be allowed to sell rice to foreign companies that have signed government-backed deals, or to foreign traders who compete in the markets where Vietnam aims to sign such contracts, the Vietnam Food Association has ruled.

The regulations were issued on July 30 and obtained by Reuters on Thursday. Vinafood 2, the country's top rice exporter, started talks on selling up to 500,000 tonnes of rice to the Philippines in late July.

Rice is Vietnam's top cash earner among its agricultural exports. It is the world's second-largest rice exporter.

The government assigns Ho Chi Minh City-based Vinafood 2 to handle rice demand from the Philippines, Malaysia and Indonesia, while Vinafood 1, based in Hanoi, deals with Iraq and Cuba. Their contracts are government-to-government deals.

Other exporters compete for company-to-company contracts and can join government deals only by contributing their rice to shipments by Vinafood 1 or 2.

The food association has from time to time banned domestic firms from selling rice to foreign firms in markets where Vinafood 1 or 2 bids in major tenders, but it had not set any formal legal framework until July 30.

The association sets a price floor for the export of ordinary rice and grants loading permits after it has checked contracts to ensure proper pricing, destinations and payment terms.

Vietnam allows free export of glutinous and fragrant rice, which make up a tiny part of overall grain exports.

Under the new rules, serious violators could have their export licence revoked by the Industry and Trade Ministry, the association said.

More than 160 rice exporters, all Vietnamese, shipped a combined 4.65 million tonnes of rice last year. Vinafood 1 and 2 accounted for the bulk of that.

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