Production

MY2015/16 corn production is forecast to increase slightly to 4.8 million metric tons in anticipation of yield improvement. Average yield is expected to increase to around 4.4 metric tons per hectare, up 2 percent from the previous year when crop was adversely affected by below normal precipitation. The increase in average yield will likely more than offset anticipated acreage reduction. Sources expect corn acreage to decline as farmers are likely to shift to cassava crop due to relatively higher attractive returns. Average farm-gate prices of corn declined by around 1 percent in 2014, compared to approximately 4 percent increase in cassava prices.

Post's estimate of MY2014/15 corn production remains unchanged at around 4.7 million metric tons.

Consumption

The Thai Feed Mill Association (TFMA) expects overall feed demand to increase to around 18 million metric tons in 2015, up approximately 7 percent from 2014. The increase mainly reflects growing boiler production which is expected to rise by 10 percent. This is driven by anticipated chicken meat exports which are forecast to increase by 5 percent in 2015, particularly in the second half of the year as South Korea will lift the import ban on Thai frozen chicken meat after nearly 12-year ban. Boiler feed demand accounts for around 40 percent of total feed demand. Swine production, which accounts for around 30 percent of total feed demand, will likely increase around 3 percent. Layer production, accounting for around 20 percent of total feed demand is expected to grow by 5 percent mainly due to continued growing domestic egg consumption. However, shrimp production is unlikely to recover from the outbreaks of Early Mortality Syndrome (EMS). Sources expect shrimp production to increase only slightly to 250,000 metric tons in 2015, compared to normal level production of around 500,000 to 600,000 metric tons.

Corn and soybean meals are the major feed ingredients for livestock production, which accounts for around half of total feed ration. However, the substitution of feed wheat for domestic corn in poultry feed rations is expected to increase significantly in 2014/15 as current average prices of imported feed wheat are relatively cheaper than prices of domestic corn. Also, demand for broken rice in swine feed ration will likely increase at the expense of cassava chip in anticipation of the sales of low quality broken rice from government stocks.

MY2015/16 corn consumption is forecast to increase to around 5.3 million metric tons, up 5 percent from the previous year in line with expanding livestock production. Poultry feed accounts for around 40 to 60 percent of total corn consumption. Feed mills still have to rely on some imported corn from neighboring countries due to insufficient domestic corn production. Sources indicate the concern about the sustainability of Thai livestock industry that will be challenged by the shortfall of domestic corn production in coming years.

MY2014/15 corn consumption is revised down to around 5 million metric tons. The lower-than-expected consumption growth reflected the substitution of imported feed wheat for corn due to relatively cheaper prices. In the first half of the year, average prices of imported feed wheat were at 8 to 8.5 baht/kg ($250-270/MT) which was 10 to 15 percent cheaper than domestic corn (roughly 9.50 baht/kg or $297/MT). Imported feed wheat reportedly can substitute for 30 to 40 percent of corn in poultry feed ration.

Trade

MY2015/16 corn exports are forecast to decline significantly to only around 60,000 metric tons in anticipation of limited exportable supplies due to growing domestic feed demand. Meanwhile, import demand for corn will likely remain strong due to insufficient domestic corn production. Imports will be mainly from border trade, particularly from Cambodia, Myanmar, and Laos.

MY2014/15 corn exports are revised up to 250,000 metric tons due to higher-than-expected corn exports to China. However, this is far lower than the previous year's heavily subsidized exports of 1 million metric tons.

Policy

The government did not implement a corn price subsidy program for MY2014/15 due to high domestic corn prices resulting from a reduction in corn production and strong domestic and export demand. The government will expand the import window for tariff and quota-free corn imports from Cambodia, Myanmar and Laos in 2015 – 2017. The imports are allowed from February 1 to August 31 instead of March 1 to June 30 in the past. Meanwhile, corn imports from other origin remains subject to a Tariff Rage Quota (TRQ) of 54,700 metric tons at a 20 percent in-quota tariff. Out-of-quota imports are subject to a 73 percent tariff rate with a surcharge of 180 baht per metric tons ($6/MT).