Thailand, Pakistan lead Bulog’s ninth rice tender of the year, securing contracts

Thailand secured seven contracts out of 18 lots to export 200,500 mt of 5% broken white rice to Indonesia's state procurement agency Bulog in its ninth rice purchase tender of 2024, while Pakistan secured four lots to export 106,500 mt of rice, trade sources said.

The latest tender result is expected to fuel a bullish sentiment in Thai and Indian markets in the short term, market sources said.

Vietnam secured three lots to export 83,500 mt of 5% broken white rice, India got three lots to supply 80,500 mt, while Myanmar secured one lot to export 29,000 mt rice of the same variety, the sources said.

Thailand and Pakistan dominated the tender in volume terms.

The lowest bid of the tender was from Pakistan at $476/mt CNF, making Pakistan the most competitive, while bids from Thailand were in the range of $512-$523/mt CNF.

A source in Thailand indicated that the short-term outlook is bullish, with vessels ready for loading to the Philippines and Indonesia. However, market participants believe the long-term outlook is bearish, as prices from other origins like India and Pakistan are anticipated to drop with the influx of fresh crop supplies. Competition from these origins is likely to exert pressure on Thai prices in the future.

Platts assessed Thai 5% WR at $490/mt FOB Nov. 5, up by $10/mt on the week.

The results are expected to drive bearish sentiment in the Pakistan market as per sources. The anticipated bearish sentiment in the market stems from the aggressive bidding by Pakistani exporters, which has led to expectations of lower prices for 5% WR. Although winning tenders typically indicate increased sales, the competitive nature of the bidding may result in a price correction, causing buyers to anticipate procuring rice at reduced rates.

Some exporters have noted that bearish trends are already emerging due to this aggressive competition, which has shifted market dynamics. However, others believe that immediate price declines may be mitigated by ongoing Bulog sales and vessel loading activities, suggesting that while the market may face downward pressure, it might not drop significantly in the short term.

Ultimately, the expectation is for prices to decrease substantially by the end of November as the market adjusts to the new supply conditions and competitive pricing.

Pakistani 5% WR was assessed at $449/mt FOB on Nov. 5, down by $11/mt on the week.

Vietnam secured its three lots at $510/mt CNF and Myanmar’s winning bid for one lot was at $517/mt CNF.

Vietnamese sources indicate that Vietnam’s white rice market has seen minimal impact from the recent Bulog tender, as there was no competition from other regions. With supplies in Vietnam already limited and now that India has re-entered the market, the Vietnamese market is expected to remain steady. However, fragrant rice prices are anticipated to climb due to strong demand from the Philippines.

Vietnamese 5% WR was assessed at $509/mt FOB Nov. 5, unchanged on the day and down by $8/mt on the week.

Indian exporters won two lots at $510/mt CNF and one lot for new supplier at $508/mt CNF.

Market participants anticipate minimal, short-lived impact on the market as fresh supply of the new crop will come in bulk volumes by end November, pressuring prices.

“Overall view is bearish only, but some short covering can lead to rise in prices,” a market participant noted.

On the impact of covering milled rice for Bulog and Pakistan’s competitive prices, Ritesh Agrawal and Krishna Shankar, Managing Partners at Sumukha Veereswara noted that “there won't be much impact as single party got [most of] the order. They are buying slowly and systematically.”

Another exporter expressed concern over sharp bids provided to Bulog and shipment deadlines.

“The prices offered by these bidders are very sharp indeed. The current local prices do not match the offered prices and are off by approximately $10-12/mt. The bigger issue is the waiting time at Kandla port which will be challenging in meeting the arrival deadline as per tender attracting penalties for delayed arrivals,” a Delhi-based exporter said.

They mirrored the sentiments of other participants noting that the rise of white rice prices locally would be “short-lived just to meet the shipment deadline where would they ship from East coast or West Coast.”

Platts assessed Indian 5% WR at $456/mt FOB Nov. 5 up $2/mt on the week, while Myanmar 5% WR was assessed at $494/mt FOB Nov. 1, down $6/mt on the week.

Bulog's tender blitz

Bulog announced its ninth tender for 2024 on Oct. 24, seeking to buy 500,000 mt of 5% broken white rice milled.

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.

In the calendar year 2024, Indonesia has issued nine tenders so far for 3.1 million mt of rice.

Commodity Insights analysts expect Indonesia's rice imports to drop 44.4% on the year in the 2024-25 marketing year (January-December) to about 2 million mt. The US Department of Agriculture estimates the inflows to slump 60.5% on the year to 1.5 million mt.

The forecasts are based on the expectation that Indonesia's rice production will return to more normal levels of 34 million to 34.5 million mt in MY 2024-25, reflecting an increase of 3% to 4.5% on the year. The USDA also projects a 3% yearly rise in output to 34 million mt. Thus, the anticipated recovery in domestic production is likely to influence the forecasts for reduced imports.