The Philippines agreed to buy 150,000 tons of rice from Vietnam in a tender on Friday and could import additional volumes to avert a potential spike in prices of the staple if adverse weather threatens the local crop.
Demand from the Philippines, one of the world's biggest rice buyers, could support weak export prices in Asia. Thai 5 percent broken white rice fell to its lowest level in a year this week at $370 a tonne.
The Philippines' state grains procurement agency, the National Food Authority (NFA), already has government approval to buy another 250,000 tons if drought brought on by an El Nino weather phenomenon hurts its harvest and it has the option to import 100,000 tons not allocated in Friday's tender.
On top of that, it is ready to allow traders to bring in up to 805,000 tons more, with tariff, in the third quarter of this year.
"That is the next importation that we will open, to be formally announced possibly within this month," said Joseph Dela Cruz, NFA deputy administrator for marketing operations.
Vietnam won Friday's tender by cutting its offer to $410.12 per ton to match the buyer's ceiling price for the 25 percent broken white rice variety.
The NFA rejected Vietnam's initial offer of $419.35 per tonne for the full volume sought of 250,000 tons and Thailand's offer of $419 per ton for 100,000 tons.
Both countries were given the chance to revise their bids but Thailand deemed the Philippines' reference price too low and withdrew.
Vietnam, which early this year won a 300,000 ton supply contract with the NFA, must deliver the 150,000 tons in July in time for the lean harvest season in the Philippines.
The NFA has imported 650,000 tons of rice so far this year after purchases last year totalling around 1.7 million tons, the biggest in four years.
With El Nino now affecting more than half of the country's 81 provinces, the government is beefing up rice stocks to avoid a repeat of last year's spike in retail prices following damage to supply chains by Super Typhoon Haiyan in late 2013.
Unlike last year, however, the cost of the staple food has been falling, with wholesale and retail prices down by 4.3 percent this year from a year before, with supply still adequate, government data showed.