Indonesia will sign a major contract to buy 500,000 tonnes of Vietnamese rice and is monitoring domestic output for further imports, state procurement agency Bulog said on Friday, in a move to maintain healthy stockpile and cool food prices.
But the deal has pushed up domestic prices in Vietnam during the peak harvest period, which would keep inflation at a high level, traders in Ho Chi Minh City said.
“We have not signed any contracts yet but we have reached an agreement to buy 500,000 tonnes of rice,” Bulog CEO Sutarto Alimoeso told Reuters, adding the rice is for prompt delivery, a move seen to fill up thinning stocks ahead of the festive season in the next two months.
“The contracts are likely to be signed either in Jakarta or Ho Chi Minh City. For the time being, we will be buying 500,000 tonnes. We will be buying rice in stages while monitoring domestic production.”
Asia is still struggling with inflation and the rebound in corn and wheat prices this month due to harsh weather after the drop in June, have revived food inflation fears, stirring concerns of a repeat of the 2007/08 global food crisis that sparked riots in some developing nations.
World rice supplies are expected to be in a surplus of more than 1 million tonnes for the next five years before shrinking, said the Food and Agriculture Organisation. Though this
abundance has shielded the Asian staple from the price surges of other grains, benchmark Thai white rice has risen by a quarter while US rice futures have jumped 70 per cent.
The government-to-government deal, making up half of an annual agreement between the two Southeast Asian countries, is in line with market expectations after industry officials and a Vietnamese state-run newspaper said Indonesia had sought to buy 400,000-600,000 tonnes.
Bulog’s Alimoeso declined to reveal the value of the deal, but said the Vietnamese rice would be purchased at prices below Indonesia’s domestic procurement level, which was last quoted at 5,600 rupiah ($0.67) a kg.
Under the deal, Vietnam sold 400,000 tonnes of the 15 per cent broken rice grade for $495 a tonne, free-on-board (FOB) basis, and 100,000 tonnes of 5 per cent broken grain at $515 a tonne, FOB, said a Vietnamese trader at an European firm in Ho Chi Minh City.
From / Gulf today