Asian rice exporters brace for possible Bulog tender in May

Top Asian rice exporters are bracing for a possible tender from Indonesian state purchasing agency Bulog in May that could support prices in the short term.

In calendar year 2024, Bulog has so far announced four tenders, purchasing 1.4 million mt. Vietnam, Thailand, Myanmar and Pakistan have been the top suppliers to Bulog this year.

The Indonesian state purchasing agency has set an import quota of 3.6 million mt for 2024 against last year's 3.8 million mt, as prolonged dry conditions attributed to the El Nino weather pattern reduced yields and output in Southeast Asia and tightened global rice supplies.

"Vietnamese and Thai rice prices are firming up as Bulog's tender is around the corner [in May]," a Pakistan-based exporter said.

"There are talks of a mid-May Bulog tender," another exporter said.

Bulog's tenders have been welcomed by exporters, with prices typically surging during purchase announcements. Demand-led price support has provided more stability to the market than supply cuts, trade sources said.

Platts, part of S&P Global Commodity Insights, assessed Vietnamese 5% broken white rice FOB at $569/mt on May 6, rising $5/mt on the week.

Bulog did not immediately respond to a request for comment regarding its next tender announcement.

Prices surge

Despite stagnant demand, global rice prices have risen in recent years because of dry weather-led supply cuts and restrictive policies by governments.

While El Nino-led drought conditions were battering Asian rice fields, the market received another supply shock as New Delhi restricted exports.

The Indian government banned broken rice exports and imposed additional duties on non-basmati white rice outflows in August 2022. By July 2023, the government had restricted non-basmati white rice exports, imposed a 20% duty on parboiled rice outflows and fixed a minimum export price for basmati at $950/mt.

Indian rice export restrictions have squeezed global supplies, leading prices to surge.

India is the world's largest exporter of rice, accounting for nearly half of the global rice trade in marketing year 2022-23 (October-September) with 20.25 million mt, down 9% on the year, according to the US Department of Agriculture. While most of the parboiled variety is exported to West African nations, Indian basmati rice is primarily shipped to the Middle East.