Brazil plans to issue a new tender for rice imports within 10 days, according to local media reports citing the Agrarian Development and Family Farming Ministry, following the cancellation of the controversial June 6 tender for 300,000 mt of rice.
The tender, which has been the subject of a legal battle between the government and rice farmers and several politicians, was annulled after concerns emerged regarding the participating companies' capabilities and the potential for conflicts of interest.
The tender had previously been suspended by a court ruling and Conab had only proceeded with it after the Federal Regional Tribunal overruled the ruling(opens in a new tab) at the last minute, with 263,000 mt being purchased.
"We intend to hold a new auction, perhaps in other models, so that we can have guarantees that we will hire companies with technical and financial capacity," said Edegar Pretto, president of Brazil's state food security agency Conab, was cited as saying June 12.
Pretto indicated that an adjusted procedure would be undertaken to ensure transparency and efficiency, aiming to to ensure delivery of quality rice at competitive prices.
The controversy has also led to the resignation of Neri Geller from his position as Secretary of Agricultural Policy, following concerns about potential conflicts of interest involving brokers related to his former aides.
The government's decision to import rice came shortly after devastating floods in Rio Grande do Sul, which grows 70% of Brazil's rice in May. On May 8, exporters in southern Brazil reported no offers amid the floods, with some rice stored in silos damaged. By May 9, offers had increased by nearly 13%, rising from $780/mt to $880/mt FOB FCL Rio Grande. Despite 80% of the crop being harvested before the floods, Brazilian exporters suspended business in flood-affected areas, causing offers to spike by another 14%to nearly $1,000/mt FOB by May 21. On May 31, Platts assessed the price for 500-3,000 mt of 5% broken rice at $874/mt on a FOB FCL Rio Grande basis.
With the cancellation of the auction, the Brazilian government is set to proceed with a new, more scrutinized process to ensure that the rice import plan effectively stabilizes the market without compromising the interests of local farmers and consumers. On June 12, following the news of the auction cancellation, Platts assessed Brazilian 5% broken rice at $814/mt, reflecting ongoing market volatility.
