Report Highlights:

For 2015, Thai rice exports are revised down to 9.0 million metric tons in anticipation of tighter exportable supplies of new-crop white rice and limited availability of good old-crop rice in the government socks. The government recently took precautionary steps to further limit irrigation water until next monsoon season. This is forecast to limit exportable supplies in 2016 which have been reduced from 10.0 to 9.5 million metric tons.

Executive Summary:

Post's forecast of MY2015/16 rice production remained unchanged at 18 million metric tons, a decline 7 percent from the previous year. This is due to on-going drought in irrigated areas, particularly in the lower northern region and the central plains. In July, the Government had to stop irrigation water supplies for main-crop rice in these regions due to critically low reservoir levels. Also, it has already announced that it will reduce the water discharge by half for the dry-season crops in 2016. In the past month, farm-gate prices of white rice paddy increased significantly in anticipation of tighter new-crop rice supplies. This will negatively affect Thai rice exports in the second half of 2015 and into 2016. Also, the government has depleted almost all of its good quality rice stocks. Thai rice exports are likely to decline to 9.0 million metric tons in 2015 and the export forecast for 2016 has been lowered to 9.5 million metric tons.

1. More stringent measure on irrigation for rice

On July 14, 2015, the Government decided to further reduce the supply of water for agriculture in the lower northern region and central plains in order to save water for household consumption. This was due to critical reservoir levels and the late arrival of the normal rainy season. The water discharge from major dams was cut to 18 million cubic meters per day (effective on July 16) compared to 28 million cubic meters per day in June. This was 70 percent lower than normal discharge of around 60 million cubic meters per day. The Government will allow minimal irrigation specifically for main-crop rice which has already reached the panicle initiation and flowering stages about 1.5 million rai (0.2 million hectares) in the lower northern region and central plains in order to minimize the drought damage.

The Thai Meteorological Department reported that cumulative rainfall is still 24 percent below normal despite rain in July. Assuming normal precipitation between August and October, reservoirs are likely to be even lower for next dry-season crop in 2016. The Government plans to limit water discharge for next dry season in 2016 in the lower northern region and central plains to 30 million cubic meters per day which is only half of normal discharge rate. The priority is to ensure water available for household consumption in urban areas.

2. Main-crop rice planting progressed in the Northeast

As of July 2015, approximately 60 to 70 percent of main-crop rice reportedly was planted. In the northeastern region, which account for half of total main-crop rice production, rice planting is progressing due to well above normal precipitation in July. Meanwhile, planting progress in the irrigated areas in the lower northern region and central plains is far below average due to lack of irrigation water.

On July 29, according to the Ministry of Agriculture's Disaster Center report, around 0.5 million rai of main-crop rice had been affected by drought. In total, the Government expects that around 1.5 million rai of main-crop rice will likely be adversely affected by drought, particularly in the lower northern region and the central plains.

Since mid-July when the Government announced that it would supply only minimal irrigation for main-crop rice in the lower northern region and the central plains, farm-gate price of white rice paddy have increased significantly to around 8,400 baht per metric ton ($242/MT) compared to 7,600 baht per metric tons ($227/MT) in June 2015. This is due to the expectation of tight supplies of new-crop white rice.

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 rice in irrigated areas.

3. Exports revised down in 2015 and 2016

Post revised rice exports down to 9.0 million metric tons for 2015, a drop of 9 percent from 2014 due to competition from Vietnam and India and expected limited exportable supplies. In the first half of 2015, Thai rice exports totaled only 4.5 million metric tons, down 5 percent from the same period last year. This mainly reflected a reduction in white and parboiled rice exports. In mid-July 2015, the price difference between Thai rice and competitors (Vietnam and India) increased to $40-50/MT. The surge in export prices of Thai white rice is due to the expectation of tighter new-crop supplies. This will likely limit exports of Thai white and parboiled rice in the second half of the year and into 2016. Also, traders feel that the government has almost depleted its stocks of good quality rice. Around 3.2 million metric tons of good quality rice from the Government stocks were sold from January to July 2015. As of July 20, the Government announced that it is holding rice stocks of around 14 million metric tons. Of the total, it is expected that around 8 million metric tons are food-grade rice, of which around 0.7 million metric tons are good quality rice and around 7.3 million metric tons are sub-standard rice or unaccounted for. Meanwhile, around 6 million metric tons are non-food grade rice, of which around 5 million metric tons are still good for industrial use and around 1 million metric tons are rotten rice.

In 2016, rice exports are now likely to only reach 9.5 million metric tons. This is due to tighter exportable supplies of white and parboiled rice in anticipation of smaller MY2015/16 off-season rice production due to the government's measure to limit irrigation water for rice crop.

Rice, Milled

2013/2014

2014/2015

2015/2016

Market Begin Year

Jan 2013

Jan 2014

Jan 2016

Thailand

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

10920

10920

10270

10643

10525

10206

Beginning Stocks

12808

12808

11724

11724

9074

10728

Milled Production

20460

20460

18750

19404

19000

18000

Rough Production

31000

31000

28409

29400

28788

27273

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

28374

29028

MY Exports

10969

10969

10000

9000

10200

9500

TY Exports

10969

10969

10000

9000

10200

9500

Consumption and Residual

10875

10875

11700

11700

12000

12000

Ending Stocks

11724

11724

9074

10728

6174

7528

Total Distribution

33568

33568

30774

31428

28374

29028

(1000 HA) ,(1000 MT)