Production

Wheat production is marginal in Thailand due to unfavorable climatic condition, lack of seed development, and unattractive returns as compared to other field crops such as rice, corn, and cassava. Total production is estimated at approximately 300 to 400 metric tons in a cultivated area of 1,000 rai (160 hectares). Cultivation is in the upper northern region of the country as a minor crop after the main-crop rice harvest, particularly in Maehongson and Nan provinces.

Consumption

MY2015/16 wheat consumption is forecast to decline to around 2 million metric tons, down approximately 10 percent from the previous year, in anticipation of a reduction in feed wheat demand. The substitution of feed wheat for corn in poultry feed ration is likely to decline as domestic corn production is expected to recover from the previous year. Also, demand for feed wheat in shrimp farming will likely remain lower than normal as the EMS outbreak has not been resolved yet. Meanwhile, milling wheat consumption is forecast to increase by around 5 percent in anticipation of growing demand from the baking and food processing industries in line with an economic recovery in 2016. Also, sources expect milling capacity of food-based wheat flour to increase significantly to about 2.4 million metric tons per year, up 14 percent from the previous year as large flour mills in Thailand continue to expand their production capacities.

MY2014/15 wheat consumption is revised up to around 2.3 million metric tons which will increase approximately 30 percent from the previous year. The increase reflects strong demand for feed wheat to substitute domestic corn in poultry feed rations. The substitution is driven by cheaper prices of imported feed wheat, compared to domestic corn prices. Meanwhile, milling wheat consumption will likely decelerate due to an economic slowdown. The government revised down the GDP growth to 0.7 percent in 2014. Also, the recovery sign of economy in the first half of 2015 remains uncertain despite the government forecast of 3.5 to 4.5 economic growth in 2015.

Trade

MY2015/16 wheat imports are likely to decline to around 2.1 million metric tons in anticipation of a reduction in feed wheat import demand. Imports of feed wheat is expected to decline to around 0.8 million metric tons, down 20 percent from the previous year due to a reduction of the substitution of feed wheat for domestic corn. Meanwhile, imports of milling wheat are likely to increase to around 1.1 million metric tons, up 5 to 6 percent from the previous year due to growing wheat-based food consumption and expanding milling capacity of flour mills. U.S. wheat imports will likely maintain its market share of 40 to 50 percent of the milling wheat market. Imports of wheat flour are forecast to increase slightly to around 0.3 million metric tons (grain equivalent).

MY2014/15 wheat imports are revised up to 2.2 million metric tons, up significantly from the previous year due to higher-than-expected demand for feed wheat for poultry feed ration. Imports of feed wheat are around 0.9 million metric tons, mostly from Ukraine. Meanwhile, imports of milling wheat are expected to increase slightly around 1 million metric tons. U.S. wheat imports will likely decline around 20 percent due to competition from Australian wheat which is reportedly around 10 to 20 percent cheaper, particularly for high-protein wheat.

Policy

The tariff rate on imported wheat has been zero since September 2007. Meanwhile, the applied tariff on wheat flour is 5 percent or 0.5 baht/kg, except in AFTA (Brunei, Indonesia, Malaysia, Philippines, and Singapore) and ASEAN-Australia-New Zealand which has been duty free since January 2010, however, 40 percent of the content has to originate from the exporting countries. Wheat flour imports from Vietnam will be duty free by the end of 2015 under the AEC.