Pakistan, Thailand eye opportunities as Bulog announces eighth rice tender of 2024

Indonesia, one of the world's largest rice importers, is seeking to purchase 450,000 metric tons of 5% broken white rice. As new crop arrivals approach in October, exporters from Pakistan and Thailand are eyeing this opportunity to secure significant volumes.

Bulog, Indonesia's state procurement agency, issued its eight tender of 2024 on Sept. 12, aiming to purchase rice from Vietnam, Thailand, Myanmar, Cambodia, and Pakistan, with delivery scheduled for October-November.

The results of the this tender will be announced on Sept. 25, with the requirement that the rice must be from the crop year 2024 (October-September) and milled no later than six months prior to delivery, according to a statement released by Bulog on Sept. 12.

The total volume of the tender is divided into multiple lots, with each lot containing about 30,000 metric tons.

This comes as the market had been anticipating a fresh tender from Bulog, but it has yet to react, as rice markets in Vietnam and Pakistan remain stable despite the tender announcement.

A trader based in Singapore said that predicting the Vietnamese rice market is particularly challenging at this time. However, a Vietnam-based seller reported that Typhoon Yagi has caused significant damage in Northern Vietnam, affecting crops that were ready for harvest. The source also said Vietnam is currently in need of donations for those affected by the typhoon.

"Stock levels are low, insufficient to meet the volume required for the previous Bulog tender," the Vietnam-based seller said.

Bulog is expected to source rice from Thailand, requiring a larger budget due to increased demand. However, India's export policies could impact market dynamics.

A Thailand-based source indicated that Bulog will need to source rice from Thailand to meet its demands, which will require a bigger budget for these purchases. The source added that the outlook for the Thai rice market appears bullish, supported by a strong Thai Baht.

"Nevertheless, the market dynamics may shift depending on any decisions made by India regarding its rice export policies, which will impact future scenarios," the Thailand-based source said.

Meanwhile, exporters in Pakistan see the upcoming tender as an opportunity to capitalize on, hoping for a higher volume allocation compared to the previous tender.

A Pakistan-based exporter said that with bulk arrivals and better-quality crops for Pakistani rice expected in October, this tender presents a significant opportunity for competitiveness.

Market participants in Pakistan see this as a chance to secure more volume, leveraging their competitive edge over suppliers from Thailand, Cambodia, and Vietnam.

There is anticipation that Pakistani prices will firm up slightly following this tender.

"The bulls are pointing to the forthcoming Bulog tender and trying to drive the market up," another source said. "The expectation is that when the terms of reference are released, there'll be a higher volume allowed for Pakistan compared to the last tender, given that Thailand had high prices in the previous tender."

In late August, Bulog announced its seventh tender, seeking to purchase 350,000 metric tons of 5% broken WR across 13 lots. Bulog subsequently retendered six lots that had been allocated to Thailand and Cambodia. However, despite these efforts, neither country was able to secure the lots, leading to their cancellation.

On a week-on-week basis, Platts assessed Thai 5% broken WR down $7/t at $562/t FOB, Vietnam 5% WR down $5/t at $544/t FOB and Pakistani 5% WR stable at $540/t FOB on Sept. 13, S&P Global Commodity Insights data showed.

Indonesia has purchased 2.13 MMt of rice so far this year through the seven tenders issued, using just over half of the quota.

Bulog has set an import quota of 3.6 MMt for 2024, down from last year's 3.8 MMt.

It is possible that the full quota will be utilized, as dry conditions attributed to the El Nino weather pattern have delayed harvests, posing a threat to Indonesian output.