Philippines rice purchase fails

The Philippines is the world's biggest rice importer

The attempt by the Philippines government to buy rice to increase its stocks has failed when a tender attracted just one bid.

The sole bidder, a Vietnam food company, did not qualify as it did not have the correct documents.

The failure of the tender illustrates the tightness in the supply market as countries have suffered shortages and the price of staple foods have soared.

Some countries have limited exports of rice this year to meet domestic demand.

The Philippines is the world's biggest importer of rice.

With world rice prices tripling this year, it has recently had to pay record prices to replenish its stocks.

This time, the National Food Authority (NAO) had offered 32.24bn Philippine pesos ($767m:495m euros) for 675,000 tonnes of rice.

An NAO spokesperson said it was negotiating with other East Asian countries, including Japan, for up to 100,000 tons of rice under an emergency rice reserve program.

Price impact

"We will wait for softer prices before scheduling another tender," said the NAO's Ludovico Jarina.

The failure of this tender may cause the price of rice to fall in exporting countries such as Thailand.

"Prices should face a short corrective phase this week," said Chookiat Ophaswongse, president of Thai Rice Exporters Association.

He predicted that the price of the grade of rice that the Philippines usually buys could fall from $950 to $900 a tonne. "But I don't expect a sharp fall in Thai rice prices because demand from other countries should remain strong," he said.

This weekend, the Asian Development Bank called for emergency aid to help countries cope with rising food prices.

Indian trading ban

Amid concerns about the role of speculators in further pushing up commodity prices, India's finance minister, Palaniappan Chidambaram, said he was considering a blanket ban on trading in food futures.

India has already banned trading of futures contracts in wheat, rice and lentils.

A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.

India has also put limits on rice exports in an attempt to bring down domestic prices.