Report Highlights: 

Thai rice exports reached a record high in October 2014 fueled by the sales of the government stocks. The government approved an on-farm pledging program to prevent seasonal price decreases for fragrant rice and glutinous rice.

Executive Summary: 

Rice exports totaled 1.2 million metric tons, a monthly record, in October 2014 as a result of subsidized prices from the sales of government stocks. Thai rice prices are likely to remain competitive for the remainder of 2014 due to large main-crop supplies of white and fragrant rice. Also, private exporters are likely to complete outstanding shipments of white rice under the government-to-government contracts with China, Indonesia, and the Philippines by the end of December 2014. The Government approved the implementation of an on-farm pledging program for MY2014/15 main-crop fragrant and glutinous rice. The program is designed to help prevent seasonal rice prices from falling. The government expects that about 2 million metric tons of rice paddy will take advantage of the program due to attractive intervention prices.

Rice Exports Record 1.2 Million Metric Tons in October 2014 

In October 2014, Thai rice exports reached a record monthly high, totaling 1.2 million metric tons. This is a 59 percent increase from the same period last year (Thai Custom Department data). Around half of October’s rice exports were white rice which more than doubled from the same period last year, particularly to African countries. Parboiled rice exports also increased significantly to 0.4 million metric tons compared to around 0.1 million metric ton last year. 

Total rice exports from January – October 2014 increased 62 percent to 8.8 million metric tons. The increase reflected competitive prices of Thai rice resulting from sales of government stocks. This is particularly true for white rice exports which increased around 75 percent to 4.5 million metric tons, with average export prices 22 percent lower than the average prices for the first 10 months of 2013. Parboiled rice exports doubled (2.7 million metric tons compared to 1.3 million metric tons) as export prices fell approximately 20 percent from the same period last year. This price reduction was also the result of suspension of the pledging program in Mach 2014. 

Thai rice prices are likely to remain competitive thru the end 2014. Recently, export prices of white rice and parboiled rice have declined to around $410 – 420/MT (FOB) due to the seasonal peak of main-crop rice supplies. Fragrant rice prices fell to $860 – 870/MT (FOB), compared to around $1,100/MT in the same period last year. Exports of new-crop white and fragrant will likely be large in the remaining months of 2014. Also, private exporters are expected to ship about 486,000 metric tons of white rice during November – December 2014 under the government-to-government contracts with China, Indonesia, and the Philippines in 2014.

The government is expected to ship another 800,000 metric tons of white rice to China in 2015 under the memorandum of understanding (MOU) with the Chinese Government for 1 million metric tons which was signed on March 5, 2014. In addition, the Government is considering a new MOU for 2 million metric tons of rice with China (for the delivery during 2015 – 2016). This potential deal is the result of Thai Government agreeing on a draft MOU with the Chinese government for the development of double-track railroads worth approximately 400 billion baht ($12.5 billion). 

Post’s forecast of Thai rice exports is unchanged from the previous estimate of 10.5 million metric tons in 2014, and 11 million metric tons in 2015. 

On-Farm Pleading Program Approved 

On November 25, 2014 the Government approved the implementation of an on-farm pledging program which is now known as “Farmer Loans to Delay the Sales of Rice Paddy for MY2014/15 Main-Crop Fragrant and Glutinous Rice Paddy” for farmers in the northern and northeastern regions. The program will be open from now thru February 2015. The program had been delayed since the beginning of November 2014. It is likely that the government will receive up to 2 million metric tons of rice paddy under the program due to attractive intervention prices, which are currently 23 percent above market prices for fragrant rice paddy, and 41 percent for glutinous rice paddy. While the intervention prices are not as high as in the previous pledging programs, they are still high enough for farmers to forfeit their rice paddy. Traders expect the government will auction this rice paddy after February 2015 when the program finishes. Estimated costs of the program are approximately 29 billion baht ($921 million). The program will be administrated by the Bank for Agriculture and Agricultural Cooperative (BAAC). The BAAC will provide the interest-free loans for famers participating in the program. 

Precipitation far below normal in October 2014 

According to the Thai Meteorological Department, average precipitation in major rice growing areas (North, Northeast, and Central Plains) was 28 percent below normal in October 2014 which is the last month of monsoon season. Average cumulative 2014 rainy season rainfall (May – October) was approximately 10 percent below normal in the rice growing areas. 

Main-Crop Harvest is Seasonal Peak 

The forecast of MY2014/15 rice and corn production remain unchanged. Rice and corn production will likely decline 2 to 3 percent from the previous year due to unfavorable weather conditions, particularly in the northern region and central plain. 

Thus far, around half of the rice crop has been harvested. Average yield was reportedly lower than the previous year in many areas in the northern region and central plain. However, average yield in the northeastern region which is the major growing areas of fragrant rice was virtually unchanged from the previous year as precipitation was near normal average. 

Recently, The Royal Irrigation Department revealed that farmers in the lower northern region and central plain would continue to grow MY2014/15 off-season rice crop despite the official warning on limited water supply from reservoirs. Thus far (as of end of November 2014), around 2 million rai (0.3 million hectares) has been planted. The cultivation progress is the same as in the previous year