Report Highlights:

MY2015/16 rice production is further revised down due to lower-than-expected off-season rice planting caused by limited irrigation availability. Feed wheat imports will be closely monitored by Ministry of Commerce.

Executive Summary:

MY2015/16 rice production is revised down to 15.9 million metric tons which is a decline of 18 percent from last year. This is due to an acreage reduction in off-season rice which is adversely affected by limited irrigation availability. Rice exports totaled 9.8 million metric tons in 2015, down 11 percent from the previous year due mainly to a reduction in parboiled rice exports. Imports of feed wheat will likely slow down in 2016 because the Ministry of Commerce has begun monitoring imports and the impact on domestic corn and cassava demand.

1. Water supplies at risk

Royal Irrigation Department (RID) reports that water supplies for all uses during the dry season (November 2015 – April 2016) in the lower northern region and central plain declined to 3.5 billion cubic meters, down from 4.2 billion cubic meters at the beginning of dry season on November 1, 2015. The current water supplies are lower-than-expected as farmers still planted off-season rice in irrigated areas despite the government “ban". Average water discharged from major dams in the north has been approximately 20 percent above the RID's baseline of 14-15 million cubic meters per day since January 1, 2016. Presently, industrial and household sectors in the cities are being officially encouraged to reduce water utilization by 20 percent to ensure that water supplies will be enough until the rainy season begins. However, if the depth of reservoirs is more shallow due to sediment accumulation, sources estimated that water supplies available could be only 50 percent of the current estimate and be exhausted by the end of March 2016.

Despite the off-season rice planting “ban", MY2015/16 off-season rice planting reportedly totaled 4.6 million rai (0.7 million hectares) in irrigated areas. This is higher than the previous estimate in September 2015. The planting mainly occurred in the central plains. Farmers planted off-season rice crop earlier than usual while the surface water was still high in multipurpose canals. However, the Ministry of Agriculture and Cooperatives' Disaster Center reported that around 1.1 million rai (0.2 million hectares) of off-season rice crop have been abandoned due to the Government's water restriction measures. Meanwhile, the off-season rice planting in non-irrigated areas declined significantly to 1.2 million rai (0.2 million hectares). There is not expected to be any additional rice production in the off-season for MY2015/16.

The critically low reservoirs reflected low precipitation for the second consecutive year in 2015. The Thai Meteorological Department reported that cumulative rainfall in the northern region where major reservoirs are located was 15 percent below normal levels in 2015.

2. MY2015/16 Off-season rice down further due to ongoing drought

MY2015/16 planted off-season rice areas are revised down to 5.8 million rai (0.9 million hectares). This is a 52-percent reduction of off-season rice areas from last year due to limited irrigation availability. As a result, total rice planting will likely decline to around 63 million rai (10 million hectares). This is approximately 11 percent lower than last year. Off-season rice production is expected to decline to 2 million metric tons (milled equivalent), a decline of 57 percent from MY2014/15. This will result in a reduction of total MY2015/16 rice production to 15.9 million metric tons, down 18 percent from last year.

3. Lower-than-expected demand for broken rice in feed ration

MY2014/15 rice consumption declined to 10.6 million metric tons, down 3 percent from MY2013/14 due to lower-than-expected-demand for broken rice in swine feed. Swine farmers reportedly shifted to imported feed wheat which was 20-30 percent cheaper than broken rice. Domestic prices of broken rice increased to 10-11 baht per kilogram ($290-300/MT) in the second half of 2015 compared to 9-10 baht per kilogram in the first half of the year. This is due to tight domestic supplies because the shipments of 5-15% broken rice under the Government-to-Government contracts with China, Indonesia, and the Philippines continued in the second half of 2015. Supplies of broken rice will likely remain tight, particularly in the first half of 2016 due to drought-reduced off-season rice production. As a result, Post's estimate of MY2015/16 rice consumption is revised down to 11.5 million metric tons.

4. Rice exports down 11 percent in 2015

According to the Thai Custom Department, rice export totaled 9.8 million metric tons in 2015, down 11 percent from 2014 due mainly to a reduction in parboiled rice exports. Parboiled rice exports totaled around 2.2 million metric tons, down 30 percent from last year. This reflected a sluggish demand from Nigeria which is the largest importer of Thai parboiled rice. Exports of parboiled rice to Nigeria declined to 0.6 million metric tons, down 50 percent from last year. Meanwhile, white rice exports totaled around 5.6 million metric tons, down 3 percent from last year due to competition from Vietnam. Export prices of Vietnamese rice were 7 percent cheaper than Thai rice. Most of white rice exports are old-crop rice from the Government stocks. In 2015, the Government sold its rice stocks of around 4 million metric tons, mainly for exports to African countries. Export prices of old-crop white rice from the government stocks were approximately 10 percent lower than market prices.

5. Wheat listed in controlled commodities

On January 19, 2016 the Cabinet approved a proposal from the Ministry of Commerce to list wheat grain as “controlled" commodity due to the surge in feed wheat imports. These increased significantly to around 3 million metric tons in 2015. This increase reflects higher-than-expected demand for feed wheat to substitute for broken rice in swine feed. Feed wheat prices in 2015 were 20-30 percent lower than domestic prices of broken rice.

The Ministry of Commerce's Department of Internal Trade will closely monitor the imports of wheat grain, particularly for feed, to ensure that the imports will not affect domestic corn and cassava demand. The details of the expected Government action have not been finalized. Sources expect any measure will result in a slowdown of feed wheat imports in 2016. Given that importers will have to declare final uses, bread wheat imports are not likely to be affected.

Post's forecast of MY2015/16 wheat imports are revised up to 3.5 million metric ton due to higher-than-expected demand for feed wheat. Feed wheat imports increased significantly to around 1.6 million metric tons in the first half of MY2015/16, compared to around 0.4 million metric tons in same period of MY2014/15. However, feed wheat imports will likely decelerate in the latter half of MY2015/16 due to pending Government's import controls. As a result, MY2015/16 imports of feed wheat will likely increase to 2.3 million metric tons, compared to around 1.9 million metric tons in MY2014/15 and 0.6 million metric tons in MY2013/14.

Rice, Milled

2013/2014

2014/2015

2015/2016

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

Thailand

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

10920

10920

10270

10643

9650

9468

Beginning Stocks

12808

12808

11724

11724

10074

11032

Milled Production

20460

20460

18750

19404

16400

15900

Rough Production

31000

31000

28409

29400

24848

24091

Milling Rate (.9999)

6600

6600

6600

6600

6600

6600

MY Imports

300

300

300

300

300

300

TY Imports

300

300

300

300

300

300

TY Imp. from U.S.

2

0

0

0

0

0

Total Supply

33568

33568

30774

31428

26774

27232

MY Exports

10969

10969

9200

9796

10300

8000

TY Exports

10969

10969

9200

9796

10300

8000

Consumption and Residual

10875

10875

11500

10600

11500

11500

Ending Stocks

11724

11724

10074

11032

4974

7732

Total Distribution

33568

33568

30774

31428

26774

27232

(1000 HA) ,(1000 MT)

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Jul 2013

Jul 2014

Jul 2015

Thailand

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

0

0

0

0

0

0

Beginning Stocks

802

802

561

703

1131

1021

Production

0

0

0

0

0

0

MY Imports

1693

1855

3489

3487

3500

3500

TY Imports

1693

1855

3489

3487

3500

3500

TY Imp. from U.S.

501

611

646

666

0

500

Total Supply

2495

2657

4050

4190

4631

4521

MY Exports

214

214

219

219

215

220

TY Exports

214

214

219

219

215

220

Feed and Residual

650

670

1600

1850

2100

2300

FSI Consumption

1070

1070

1100

1100

1135

1160

Total Consumption

1720

1740

2700

2950

3235

3460

Ending Stocks

561

703

1131

1021

1181

841

Total Distribution

2495

2657

4050

4190

4631

4521

(1000 HA) ,(1000 MT)