Bloomberg News

Indonesia, Philippines Poised to Reduce Rice Purchases in 2013

November 27, 2012

Indonesia and the Philippines are set to cut rice purchases next year, increasing competition among exporters amid rising global supplies, according to two executives in importing countries.

Indonesia, the largest buyer in 2011, will probably reduce imports to about 1.5 million metric tons from 1.7 million tons this year, said Mohammad Ismet, a consultant at the United Nations in Jakarta who formerly worked at Bulog, the state food agency. The government of the Philippines, the biggest importer until 2010, may end overseas purchases, said Rex Estoperez, a spokesman for the National Food Authority.

Rice traded in Chicago gained 1 percent this year compared with a 36 percent jump in wheat and a 17 percent rally in corn. Rice export prices, tracked by the United Nations, declined 3.6 percent in the 12 months to October, as shippers including India, Vietnam and Pakistan competed for market share, curbing food costs and preventing a global food crisis.

“Abundant supplies and prospects for good production have resulted in high global stocks and lower prices,” Ismet, who worked at Bulog for 31 years before joining the UN’s Food & Agriculture Organization, said in an interview in Singapore yesterday. “That trend will continue as Thailand releases state stockpiles.”

Record Output

Global milled rice production will rise to an all-time high of 486 million tons in 2012, increasing inventories to a record 170 million tons, the FAO said in a report this month. Opening stockpiles for 2012-2013 will climb to the highest in a decade, according to the U.S. Department of Agriculture.

While Thailand has agreed to supply Indonesia with as much as 1 million tons a year, that volume may not be purchased because Thai rice is more expensive than that from Vietnam, Ismet said. Indonesia has a similar agreement with Vietnam and Thailand will need to cut prices to win contracts, he said.

The 25-percent broken rice that’s typically bought by countries like the Philippines was priced at $420 a ton in Vietnam in October, compared with $565 in Thailand, $410 in India and $395 in Pakistan, according to FAO data.

“It’s the competition that’s pushing prices lower,” said Estoperez of the state-run National Food Authority, which bought a record 2.45 million tons in 2010, making it the top purchaser. “NFA is not buying next year, and the government will decide the volume of private imports in the next few weeks.”

Imports by the Philippines will probably drop to 100,000 to 150,000 tons in 2013, Agriculture Secretary Proceso Alcala said in October. Inbound shipments this year reached 500,000 tons, Estoperez said in an interview in Singapore yesterday.

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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