Bulog tender sees Pakistan, Thailand compete amid dwindling Vietnamese supplies

Indonesia's state-owned purchasing agency, Bulog, announced its seventh tender of the year Aug. 23, seeking to buy 350,000 metric tons of 5% broken white rice. Pakistani sellers view this as a promising opportunity, given the arrival of their new crop in September and their competitive pricing.

As Vietnam's supplies dwindle, competition is expected to intensify between Thailand and Pakistan

The rice is to be sourced from Vietnam, Thailand, Myanmar, Cambodia, and Pakistan, with delivery scheduled for September-October.

The results will be announced Sept. 5, with the requirement that the rice be from the crop year 2024 (October-September) and milled no later than six months, according to the announcement.

In calendar year 2024, Indonesia has so far issued seven tenders, purchasing 2 MMt of rice in the first six tenders, using a little over half of the quota. Vietnam, Thailand, Myanmar and Pakistan have been the major suppliers to the Southeast Asian nation this year.

The Indonesian state purchasing agency has set an import quota of 3.6 MMt for 2024 against last year's 3.8 MMt. It is possible the full quota will be utilized as dry conditions attributed to the El Niño weather pattern have delayed harvests, threatening Indonesian output and tightening global rice supplies.

A Pakistan-based trader said, "Vietnam are running out of supplies. It's going to be a Thailand and Pakistan game this time around. With the Thai Baht strengthening, prices in Thailand have risen, and Pakistan will try to price themselves off Thai values. In the short term, Pakistan's outlook is bullish, particularly due to the tight arrival schedule for September and October. However, there have been previous delays in shipments, both from exporters and Bulog. Pakistan will be hot to take this business as they don't really have any other destinations for this sort of volume."

Although Pakistan's short-term outlook is bullish, previous delays in shipments remain a concern. Some Pakistani exporters also warned that limited arrivals of the new crop could pose challenges.

A Pakistani exporter cautioned that challenges might arise as the arrival of the new crop in September-October might be limited.

Vietnamese rice prices are expected to remain firm until the Bulog tender results are announced, with some uncertainty about whether exporters will undercut prices.

A Vietnamese rice trader said, "Prices in Vietnam are likely to stay firm until the Bulog tender results are announced. While Vietnam currently has higher prices than Thailand, there's uncertainty over whether some Vietnamese exporters might undercut prices as they have in the past. So, let's wait and watch. Meanwhile, there is some excitement in Pakistan too as their prices are attractive and rice is available in significant quantities."

Meanwhile, a Singapore-based trader said, "It is very difficult to predict [the] Vietnamese market as it seems they are desperate to sell to Bulog at lower price."

As Vietnam's supplies dwindle, the competition will likely focus on Thailand and Pakistan.

A source from Thailand mentioned that, in the latest Bulog tender, Thailand could win as it is much more competitive than what it was in the previous tender. "Additionally, Thai export prices are anticipated to drop as local prices are expected to decrease in the coming weeks. Currently, Bulog is the only active buyer in the market, as others are waiting for clarity on the situation regarding India's rice export ban," the source added. However, another Thai seller noted that Thai prices are firming up due to the tender.

Platts, part of S&P Global Commodity Insights, assessed Thai 5% broken white rice FOB up $11/t on the week at $570/t on Aug. 23, while Vietnamese 5% broken white rice FOB was assessed up $10/t at $564/t over the same period. Platts assessed Pakistani 5% broken white unchanged on the week at $540/t FOB.