The Philippines scrapped its largest rice tender of the year on Monday and said it preferred to hold back importing until prices fall, sending a signal to world grain markets that rice prices might have peaked.

Manila's willingness to wait could give some breathing space to importers scrambling for cargoes in recent weeks. Prices have trebled this year with world stocks at decades lows and demand strong.

Leaders attending the annual meeting of the Asian Development Bank in Madrid warned on Sunday the region was at risk of undoing a decade of gains because of soaring food prices that could also spark social unrest.

"We feel that we are not pressured to buy now," said Ludovico Jarina, deputy administrator of Manila's National Food Authority, (NFA), the state's grain importing arm.

The Philippines, the world's top rice importer, said prices were on a downward trend and, after cancelling a tender for 675,000 tonnes of the grain, said it could wait until later this year, possibly the third quarter, to return to the market.

Jarina officially declared Monday's eagerly-awaited tender a failure after Vietnam's state-owned Vinafood II, the sole participant, failed to supply a bank guarantee.

After consistently failing to secure the asked-for volume in recent tenders with private dealers, the Philippines was trying this week to deal exclusively with state firms and traders with government guarantees.

The NFA, which keeps the price of rice artificially low at home to feed millions of poor Filipinos, has insisted it has enough supply for a lean period in the third quarter, but dealers doubted Manila would be able to defer imports for long.

"They keep saying they have enough rice for the third quarter but today's tender was meant to be for delivery for May and June," said one dealer, who declined to be identified.

FOOD PRICE SPIRAL

Thai 100-percent B grade white rice, the world's benchmark, is currently trading around $990 a tonne, down from a peak of $1,000 a tonne late last month. U.S. rice futures fell over 1 percent on Monday after hitting all-time highs recently.

"Today should have been a price-setting day but that did not happen," said a trader. "I think people will just sit back and wait."

After decades spent transforming paddy fields and farmlands into hi-tech industrial parks and 21st century cities, the issue of agricultural self-sufficiency has come back to haunt Asia -- home to two-thirds of the world's poor.

At the ADB meeting in Madrid, finance ministers warned of dire consequences, including riots, if the food price spiral continued and the Manila-based bank pledged financial aid to help plug the problem.

Southeast Asian nations have also agreed to cooperate over the rice market, but no measures have been unveiled.

The Association of South East Asian Nations (ASEAN) already has an emergency rice reserve of around 87,000 tonnes which Jarina said Manila would like to tap.

Thai Prime Minister Samak Sundaravej recently revived talk of an "OPEC-style" rice cartel in Southeast Asia involving producers Thailand, Vietnam, Myanmar, Laos and Cambodia. But analysts have said the idea was unlikely to gain traction.

Myanmar, the world's biggest rice exporter before World War Two, has yet to say how badly farms have been affected by a devastating cyclone that ripped through its rice bowl on Saturday.

Cambodia's Prime Minister said on Monday that a rice cartel would be designed to help and not hinder food security.

"We do not mean to keep the commodity in stock when the price increases, or to set the price high for export," Hun Sen told students in Phnom Penh. "Friends of ASEAN countries should not worry about the forming of such a rice cartel."

The Philippines, which has spent around $1 billion buying approximately 1.7 million tonnes of rice for this year, said it would allow private importers to buy up to 163,000 tonnes of rice in a country-quota specific tender on May 9.

The rice will be sourced from Thailand with 98,000 tonnes, China and India with 25,000 tonnes each and Australia with 15,000 tonnes, NFA officials said.

But Australia is producing one of its smallest rice crops ever this year after the worst drought in a century and Gerry Lawson, chairman of Sunrice, the country's main exporter, said Australia would not be able to take part in Friday's tender.

Private importers tend to stay on the sidelines in the Philippines because of a 50 percent tariff.

The NFA said it would replace the tariff with a service fee for Friday, but demand is still expected to be lukewarm because it's difficult to compete locally with subsidised NFA rice.