THE PHILIPPINES is rocking the world of rice trade as it prepares to buy a record 600,000 metric tons of grade B (25 percent brokens) white rice via open tender.

Manila’s largest single tender volume to date was announced just five days after a tender for 250,000 tons. It is also the second frontloading for 2010 supplies.

“International prices tend to firm up at the time of any international tender for a simple reason of multiplier effect,” Shahzad F. Naqi, CEO of Peak Group of Companies, which owns trading company AnglePeak (Pvt) Ltd., told the Inquirer via e-mail.

Naqi said the Dec. 1 tender is notable in that the National Food Authority, “arguably the biggest buyer of rice in the world today,” is in the market again about a week after its first tender for 2010 supply and this time with a record quantity of 600,000 tons.

“What international trade will read from this is the seriousness of shortage situation in Philippines. We are talking about an importation of about 1 million tons in less than 30 days!” he said.

Miguel Gomez, general manager of CM Oriental General Trading Inc., said via text message that rice prices may increase by about 20 to 30 percent from this week to the next due to increased demand, tightening global supply, and increasing oil prices.

Other traders said a weak US dollar was also a factor.

But demand is the single biggest factor moving prices up.

In Vietnam, the world’s second-largest rice exporter next to Thailand, prices have been going up this week, said Lieu Quoc Tien of the Vinh Long Import Export Joint Stock company via text message from Ho Chi Minh City.

“In Pakistan, rice prices have already gone up 5 percent from their lows of 15 days ago. I expect prices will go up another 5 percent even before the tender is opened. If a large quantity of Pakistani rice is sold then market will rise even further,” said Karachi-based independent trader Haider Obaidullah via e-mail.

Bob Papanos, director at US-based Seacor Commodity Trading LLC, told the Inquirer in an interview that for much of 2009, it was easy for governments to say there was no demand for rice—but no more.

“These things build up and then other countries will go ‘Oh, the price of rice is going up,’” Papanos said.

Government and private sources alike agreed that between demand from the Philippines and India - one of the world’s biggest consumers of rice, which is back to importing after many years of exporting - “the international rice market is quite bullish.”

In late October, at a rice conference in Cebu, even Agriculture Sec. Arthur Yap, who is normally tightlipped on rice demand and prices, admitted there could be a “rerun” of rice price surges, similar to what took place in 2008.

Benchmark white rice reached a record $1,080 per ton in April 2008.

Demand for rice in the Philippines has been rising by 4.7 percent a year over the last five years and production is unable to keep up with 3.8 percent average growth, NFA administrator Jessup Navarro said in a presentation at a recent rice conference.

Following the Philippines’ last open tender for 2009 in July, rice prices climbed by about $10 per ton.

The Philippines imports about ten percent of its rice needs every year.

The world’s biggest rice importer bought 1.775 million tons of the staple for 2009, less than the 2.4 million tons it bought in 2008.

However, Manila’s 2010 rice imports could reach 2.4 million, according to US Department of Agriculture data, due to crop losses due to typhoons. The Philippines lost an estimated 1 million tons due to typhoons.

There’s also talk that the Philippines will import as much as 3 million tons as the looming 2010 elections fuel demand for the politically important grain, Chookiat Ophaswongse, Thailand Rice Association president, told the Inquirer.