Thailand. Rice Update. Feb 2015 March 11, 2015
Rice exports reached a record 11 million metric tons in 2014, up 63 percent from the previous year, driven by the sales of government stocks. The government expects to continue the sales of rice stocks and maintain exports in 2015. MY2014/15 rice production is revised down slightly from the previous forecast due to acreage reduction of the off-season rice crop in non-irrigated areas. The current on-farm pledging program announced in November 2014 does not appear to be attracting farmer interest as the market price for fragrant rice is well above the intervention prices.
Rice Exports All Time High 11 Million Metric Tons in 2014
Thai rice exports were higher than expected in 2014 totaling around 11 million metric tons compared to Post's estimate of 10.5 million metric tons. According to the Thai Customs Department, Thai rice exports reached a record high totaling 10,969,360 metric tons (roughly 11 million metric tons), which is an increase of 63 percent from the previous year. The increase reflected the competitiveness of Thai rice on the world market resulting from the heavily subsidized sales of government stocks, particularly for white rice. Exports of white rice doubled (5.6 million metric tons compared to 2.8 million metric tons) as export prices fell approximately 20 percent from the previous year, spurred by the sale of government rice stocks. Parboiled rice exports increased to 3.3 million metric tons, up 90 percent as a result of the elimination of white rice paddy pledging program.
In December 2014, total rice exports reached 1.5 million metric tons. Approximately 1 million metric tons were white rice as exporters actively shipped rice under government-to-government contracts with China, Indonesia, and the Philippines.
Exporters reportedly completed the shipments to Indonesia and the Philippines in January 2015. Meanwhile, the government is still negotiating the prices for the pending shipment of around 700,000 metric tons under the government-to-government contract with China. Traders expect the shipment to be completed in 2015. In addition, the government would like to finalize an additional 2 million metric tons under another government-to-government contract with China. While this has been widely reported, it has yet to be finalized between the two countries.
Post's forecast of Thai rice exports in 2015 is unchanged from the previous estimate of 11 million metric tons. The government eased the terms and conditions for new tenders to accelerate the sales of rice stocks due to the concerns over warehouse costs which averaged around 2.6 billion baht ($79 million) per month.
On-Farm Pledging Program off the Target
The current government's on-farm pledging program, which is known as the "Farmer Loans to Delay the Sales of Rice Paddy" (TH4120, Grain and Feed Update – November 2014), does not appear to be attracting farmer interest as the market prices for fragrant rice paddy is well above the intervention prices. As of January 25, 2015 the program which is operated by the Bank Agriculture and Agricultural Cooperatives (BAAC) has only received around 80,000 metric tons of fragrant rice paddy. Currently, the BAAC expects the program to receive between 200,000 – 300,000 metric tons of fragrant rice paddy prior to the end of the program which is scheduled for February 28, 2015. This is down considerably from the 2 million metric tons the government expected to receive when the program was announced in November 2014. Also, the amount of glutinous rice paddy is negligible and primarily used for household consumption.
Anticipated Lower MY2014/15 Rice Production
The forecast of total MY2014/15 rice production has been reduced by 400,000 metric tons from the previous estimate due to an acreage reduction of the off-season rice crop. Farmers in non-irrigated areas, which account for 20 to 30 percent of total off-season rice production, reportedly planted less acreage due to the lack of water resources. Post revised down planted areas of off-season rice crop from the previous estimate to around 12 million rai (1.9 million hectares), which is a decline of around 8 percent from the previous year. Off-season rice production is likely to decline to 7.8 million metric tons, down 9 percent from the previous year.
Post's estimate of MY2014/15 main-crop rice production, which has already been harvested, remains unchanged from the previous estimate, which indicated a 1.5 - 1.6 percent decline in average yields. In December 2014, the Ministry of Agriculture and Agricultural Cooperatives' Office of Agricultural Economics revised down its average yield estimates showing a reduction of 1.5 percent from the previous year, which is in line with Post's earlier forecast.
Cumulative rainfall in 2014 is around 15 percent lower than the previous year and 5 percent below normal. Precipitations are at record lows in major rice growing areas, particularly in the northern (1,115 millimeters) and central plain regions (1,056 millimeters)