Vietnam cuts rice export price floor, eyes Manila tender

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Vietnam has lowered its price floor for exports of low-grade rice for the second time in a month, an industry source said, as the world's No.2 exporter of the grain looks to make its shipments more attractive amid a global supply glut.

The Southeast Asian nation from Monday cut the floor by nearly 3 percent to $355 a tonne, said the source, who is familiar with the floor-setting mechanism used by the Vietnam Food Association. He declined to be identified by name.

Early last month, the floor was lowered to $365 per tonne to help exporters compete with countries such as Thailand, India and Pakistan, but Vietnam's rice exports in January and February still dropped 12 percent from a year ago to 702,000 tonnes.

Low-grade rice has a broken grain content of between 25 and 100 percent.

Meanwhile, the Philippines is gearing up to issue a tender to buy 800,000 tonnes of rice, Vietnam's official Tuoi Tre (Youth) newspaper quoted the VFA as saying.

"This is a record high level in a tender by the Philippines during their rice harvesting period, showing they are very short of rice," the newspaper quoted the association's chairman, Truong Thanh Phong, as saying. Reuters could not immediately reach Phong for comment.

Manila has been expected to buy more rice overseas as it scrambles to refill stockpiles it needs to help curb rising prices for the national staple, with speculation rife on the timing and size of any tender.

But officials in the Philippines, where rice harvesting runs from mid-March until April, said that nothing had been finalised.

"There is a lot of speculation but we haven't really finalised anything at the moment," said Dennis Arpia, a senior executive assistant at the country's National Food Authority.

"But we have a mandate to boost and maintain a healthy buffer stock."

Increased purchases by the Philippines, one of the world's largest rice buyers, would help ease global oversupply, with Vietnam and Thailand likely to bid aggressively for any new deal.

The U.S. Department of Agriculture has already said it expects Philippine imports to hit 1.4 million tonnes in 2014, which would be the highest in four years. The country has yet to confirm any purchases beyond 500,000 tonnes it bought from Vietnam in a government-to-government deal in November.

In Vietnam, rice export quotations have eased in the past week as fresh supplies of the winter-spring crop from the Mekong Delta food basket have been arriving in bulk. The harvest peaks from mid-March and ends in late April.

Five-percent broken rice has fallen to $370 a tonne on a free-on-board basis for loading in April, from $380-$400 a tonne quoted in late February.

"Foreign buyers are waiting for prices to fall in Vietnam and have yet to buy anything yet," said a trader at a foreign firm in Ho Chi Minh City.

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