The Philippines agreed to buy 1.5 million tons of rice from Vietnam with the latest shipment quoted at $420 per ton, up 8 percent from last week’s $400 per ton.

The shipment is estimated to cost $630 million or P29.86 billion which will fill roughly 10 percent of total demand for the year.

The contract price led to the spike in rice export prices from Vietnam and Thailand.

Last year, the Philippines’ huge imports pushed prices to as high as $1,000 per ton.

Reports from Reuters showed that the benchmark 100 percent B grade white rice in Thailand, the world’s biggest exporter, rose 1.7 percent to $590 per ton on the back of firm demand from African countries.

Vietnam confirmed yesterday the massive export deal of 1.5 million tons to the Philippines.

The purchase accounts for 30 percent of Vietnam’s projected export volume this year.

In Vietnam, the second biggest rice exporter, prices were higher after the government raised export floor prices up to 6.4 percent on Tuesday. Loading demand for shipments to the Philippines also gave prices a lift.

The minimum export price of 5 percent broken rice was $420 per ton, FOB, Saigon Port, up 5 percent from $400 a ton previously, according to Vietnam’s Food Association (VFA).

The floor prices for the 10 percent and 25-percent broken grades are now $415 and $390 a ton, FOB Saigon Port, respectively, up from $390 and $370 before, the VFA said in a report.

"Thailand could sell around 100,000 to 200,000 tons rice per month to Africa, mostly parboiled rice," a trader said.

Thailand is expected to sell around 2 million tons of rice to Africa in 2009, unchanged from last year.

The Southeast Asian nation has a target to export 8.5 million tons of rice this year, down from sales of 9.5 million tons in 2008.

Thai prices were also supported by a government intervention scheme, which has bought 4.5 million tons of rice from farmers since November. It aims to buy up to 8 million tons before the program expires in February.

The industry group said it expected Vietnamese shipments to reach 2.8 million tons in the first half of 2009, up nearly 15 percent from the same period last year.

In India, the government was expected to again lower the floor price for basmati rice exports to help traders losing market share to Pakistan.