Report Highlights:

Recent tight domestic corn supplies have resulted in higher import demand for feed wheat. As a result, imports of wheat are revised up to 3.5 million metric tons in MY2014/15 and 2.7 million metric tons in MY2015/16. Of the total, feed wheat totaled 1.9 million metric tons in MY2014/15 and is expected to be around 1.5 million metric tons in MY2015/16.

Executive Summary:

Post forecast of MY2015/16 rice production remained unchanged at 18 million metric tons which is a decline of 7 percent from the previous year. This is due to on-going critically low reservoirs which will affect the off-season rice in irrigated areas.

MY2015/16 corn production is revised down to 4.7 million metric tons in anticipation of a reduction in average yield due to unfavorable weather conditions. Also, the seasonal harvest of corn is likely to be delayed due to the replanting of corn in the drought-affected areas. Tight domestic supplies of corn resulted in higher import demand for feed wheat which was 10-15 percent cheaper than domestic corn. Feed millers reportedly shifted to imported feed wheat for poultry and swine feed ration.

MY2014/15 and MY2015/16 wheat imports are revised up to 3.5 and 2.7 million metric tons respectively. This is due to higher-than-expected demand for feed wheat caused by tight supplies of domestic corn.

1. Reservoir remains low

In August 2015, reservoir levels in major dams that supply irrigation for main-crop rice in the northern and central plain regions are still lower than the previous year due to lack of rain. The Thai Meteorological Department (TMD) reported that cumulative rainfall was about 15 percent below normal. The TMD expects slightly below normal precipitation in August until the end of rainy season in October. This is likely to result in lower reservoirs for next dry-season crop in 2016. Since July 16, the Government has discharged minimal water at 18 million cubic meters per day. This compares to regular discharge of around 60 million cubic meters per day. This stringent measure is to save the water for household consumption in 2016.

2. Rice

MY2015/16 main-crop rice planting is complete in major growing areas, particularly in the northeastern region which accounts for around 60 percent of total main-crop rice area. It is a major growing area for fragrant and glutinous rice. The harvest will begin in November. On August 19, according to the Ministry of Agriculture's Disaster Center report, around 1 million rai (0.16 million hectares) of main-crop rice had been affected by drought, particularly in the lower northern region and central plains.

Post's forecast for MY2015/16 rice production remains unchanged from the previous forecast of 18 million metric tons. This will be a 7-percent reduction from MY2014/15 due to the impact of drought on yield and anticipated acreage reduction in main-crop and off-season crop in irrigated areas.

3. Corn

MY2015/16 corn production is revised down to 4.7 million metric tons due mainly to a reduction in average yield due to drought. This will be about 2-percent reduction from MY2013/14. According to the Disaster Center's report on August 19, around 1.7 million rai of field crop (0.27 million hectares), mostly corn, were affected by drought. Farmers who were adversely affected by drought in major growing areas have reportedly replanted since June 2015. Sources indicate that the replanting will delay the seasonal harvest by 1 to 2 months from normal harvest between July and August.

Corn

2013/2014

2014/2015

2015/2016

Market Begin Year

Jul 2013

Jul 2014

May 2016

Thailand

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1120

1120

1100

1100

1100

1090

Beginning Stocks

643

643

144

119

244

114

Production

4900

4900

4850

4800

4900

4700

MY Imports

600

600

600

600

600

600

TY Imports

600

600

600

600

600

600

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

6143

6143

5594

5519

5744

5414

MY Exports

1099

1099

250

305

100

60

TY Exports

1109

1109

250

305

100

60

Feed and Residual

4800

4825

5000

5000

5300

5150

FSI Consumption

100

100

100

100

100

100

Total Consumption

4900

4925

5100

5100

5400

5250

Ending Stocks

144

119

244

114

244

104

Total Distribution

6143

6143

5594

5519

5744

5414

(1000 HA) ,(1000 MT)

In the first half of 2015, average farm-gate price of corn increased to 8.6 baht/kg ($239/MT), up 35 percent from the same period last year. This reflected the shortages of domestic supplies of corn due to unusual weather conditions. Feed millers shifted to imported feed wheat for poultry and swine feed ration. Prices of imported feed wheat are reportedly 10-15 percent cheaper than domestic corn.

4. Wheat

MY2014/15 and MY2015/16 wheat imports are revised up due to higher-than-expected feed wheat demand. This reflected the shortages of domestic corn supplies due to unusual weather condition and growing demand for poultry feed. MY2014/15 wheat import nearly doubled to 3.5 million metric tons. Of the total, 1.9 million metric tons were feed wheat and the remainder is milling wheat (1.4 million metric tons) and wheat flour and products (0.2 million metric tons). Most of feed wheat imports were from Ukraine and European countries.

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Jul 2013

Jul 2014

Jul 2016

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

1042

1021

Production

0

0

0

0

0

0

MY Imports

1693

1855

3400

3487

2600

2700

TY Imports

1693

1855

3400

3487

2600

2700

TY Imp. from U.S.

501

611

646

666

0

500

Total Supply

2495

2657

3961

4190

3642

3721

MY Exports

214

214

219

219

215

220

TY Exports

214

214

219

219

215

220

Feed and Residual

650

670

1600

1850

1300

1500

FSI Consumption

1070

1070

1100

1100

1135

1160

Total Consumption

1720

1740

2700

2950

2435

2660

Ending Stocks

561

703

1042

1021

992

841

Total Distribution

2495

2657

3961

4190

3642

3721

(1000 HA) ,(1000 MT)

Meanwhile, the milling wheat imports of 1.4 million metric tons, which increased around 35 percent from MY2013/14, reflected growing demand for high protein wheat. Imports of U.S. wheat increased to around 0.7 million metric tons, of which around 50,000 metric tons were feed wheat.

Four mills are reportedly building stocks due to attractive prices of imported milling wheat which are 15 percent below the previous year. Presently, their stocks are almost double normal amounts as demand for wheat in bakery industries slows down in line with the economy. The Government has revised down the economic growth in 2015 to 2.7 – 3.2 percent, compared to the previous forecast of 3 – 4 percent.

MY 2015/16 wheat imports are expected to decline to 2.7 million metric tons in anticipation of a reduction in feed wheat import demand. Imports of feed wheat will likely decline to 1.5 million metric tons, down around 20 percent from MY2014/15 in anticipation of a reduction of the substitution of feed wheat for domestic, particularly in the second half of MY2015/16. Meanwhile, milling wheat imports are likely to decline to 1 million metric tons due to high carry-over stocks from MY2014/15.