Report Highlights: 

The progress of the MY2014/15 corn harvest is far below 2013 due to late planting caused by drought. Reservoirs remain critically low due to below normal precipitation, which will likely limit MY2014/15 off-season crop acreage expansion, particularly for rice in the central plain. Rice exports will likely continue strong for the remaining months of 2014 driven by the government-to-government contracts. Also, the Thai Government announced that future sales of its rice stocks will only limit for export.

Likely Low Precipitation and Critical Reservoirs 

According to the Thai Meteorological Department (TMD), average precipitation for the whole country was 4 percent above normal levels in August 2014. Precipitation is well above normal in major growing areas of corn in the central and the north. This helped limit the drought damage on corn production, particularly for replanted corn crop. 

The TMD expects 1 to 4 percent below normal precipitation during the remaining months of the rainy season in major growing areas of rice. Thus far, precipitation in September and cumulative 2014 rainfall is still far below normal in the north and central plain. This could dampen average yield of MY2014/15 main-crop rice production. Also, reservoirs remains critically low which will affect the next off-season rice cultivation which normally begins in November. The Royal Irrigation Department (RID) announced that it would limit MY2014/15 off-season crop acreage at 2 million rai (0.3 million hectares) in the central plain which accounts for half of the off-season rice cultivation. The RID encouraged farmers to shift to alternative crops to avoid possible drought damage regarding current critical reservoir levels. 

Corn Harvest Underway 

As of September 24, 2014, MY2014/15 corn is reportedly 30 percent harvested compared to 40-50 percent (which is normal) in the same period in 2013 due to the delayed crop planting caused by drought. The average yield is reportedly lower than last year in major growing areas in the northern and northeastern regions. Post’s forecast of MY2014/15 rice and corn production remains unchanged from the previous estimate, which expected a 2 to 3 percent reduction in corn and rice production due mainly to a reduction in average yield. 

Rice Exports Strong Despite Limited Sales of Rice Stocks 

Post’s forecast of Thai rice exports in 2014 remains unchanged from the previous forecast of 9.5 million metric tons. According to the Thai Custom Department, rice exports from January – August 2014 totaled 6.6 million metric tons, up 59 percent from the same period last year. Rice exports are likely to continue strong in the remaining months of the year driven by the government-to-government contracts. The Thai Government signed three contracts totaling 575,000 metric tons with China, Indonesia, and the Philippines during August – September 2014. The contracts mostly consisted of new-crop white rice. The deliveries will likely be completed by December 2014. All of them are subcontracted to rice exporters. The qualified exporters will receive an export subsidy of $20/MT and $25-30/MT for the shipments under the government-to-government contracts with China and the Philippines. The subsidies will be paid in rice from the government stocks. Over the past several months, the Thai Government has made only limited sales of rice stocks in order to avoid downward pressure of cash prices. In addition, on September 24, 2014 the Thai Government announced that future sales of rice from its stocks will be limited for exporters who have purchase orders. This is being done to further limit downward price pressure in advance of the main-crop rice harvest