Executive Summary: 

Estimated Thai rice exports are revised up to 9.5 million metric tons in 2014 as export demand has been higher than expected reportedly due to competitive prices and tight supplies of Vietnamese rice. Meanwhile, MY2013/14 wheat imports were lower than expected due to the reduction in feed wheat demand as shrimp farming still has not recovered from the outbreak of Early Mortality Syndrome (EMS). Post’s MY2014/15 rice and corn production forecast remains unchanged, at 2 to 3 percent lower than last year, as precipitation is still below average in major growing areas. The government has warned farmers of possible water shortages in non-irrigated areas. 

Low Precipitation in Major Growing Areas 

The Thai Meteorological Department (TMD) reported that average precipitation for the whole country is slightly above normal levels in July 2014. However, in the major growing areas for corn, precipitation is still 20-40 percent below average since the beginning of the rainy season in May. Cumulative rainfall for this year is 10-20 percent below average in the north and central plain, which are the major growing areas for rice and corn. According to the latest TMD’s forecast of the rainy season, precipitation is likely to be lower than the previous year’s levels. This will likely affect farmland in non-irrigated areas which account for approximately 80 percent of total agricultural area. As a result, the Royal Irrigation Department has warned farmers of possible water shortages in the dry season as reservoirs for major rice growing areas remain at critical levels. Post’s MY2014/15 rice and corn production forecast remains unchanged from the previous estimate, which expects a 2 to 3 percent reduction in rice and corn production from last year due mainly to a reduction in average yield. 

Forecast Rice Exports Revised Up to 9.5 Million Metric Tons for 2014 

Post’s forecast of Thai rice exports in 2014 is revised up to 9.5 million metric tons in 2014 due to competitive prices and current tight supplies of Vietnamese rice. According to the Thai Custom Department, rice exports from January – July 2014 totaled 5.6 million metric tons, up 56 percent from the same period last year due to competitive prices which resulted from sales of government stocks. The previous government issued public tenders of approximately 4 million metric tons during January – May 2014. The sales of government-owned rice resulted in a further reduction of the export prices of Thai rice in the first half of 2014, particularly for white and broken rice. The average export prices of 5 percent grade white rice in the first seven month of the year were $395/MT, which is a decline of approximately 30 percent from the same period last year. Average monthly rice exports increased to 0.8 million metric tons, compared to 0.5 million metric tons in the previous year. Thai rice exports will likely continue strong in the remaining months of the year due to multiples inquiries from Asian and African countries. Also, large supplies of MY2014/15 main-crop rice will enter the market in the last quarter of 2014 due to the military government’s suspension of the pledging program. Meanwhile, supplies of Vietnamese rice are reportedly likely to remain tight until early 2015 when the new crop harvest will begin allowing additional Thai exports in 2014. 

Presently, in August 2014 export prices of Thai rice (5 percent grade white rice) increased to around $430/MT which is close to Vietnamese rice prices as the Thai military government slowed down the sales of government-owned rice to maintain current domestic prices of white rice paddy (farm-gate prices) at 8,500 – 9,000 baht per metric tons ($265-280/MT). 

MY2013/14 Wheat Imports Lower Than Expected 

According to the Thai Custom Department, MY2013/14 wheat imports totaled 1.8 million metric tons, down 9 percent from the previous year due to a reduction of feed wheat demand. Feed wheat demand is lower than expected as shrimp production reportedly declined in the second half of MY2013/14, down approximately 40 percent from the same period in MY2012/13 due to the EMS outbreak. In 2014, shrimp production is reportedly likely to be lower than expected at around 250,000 metric tons, compared to the previous forecast of around 300,000 metric tons. Also, the substitution of imported feed wheat for corn and broken rice in poultry and swine feed rations declined due to relatively cheaper prices for domestically produced corn and broken rice. Domestic prices of corn and broken rice fell 16 and 29 percent from the previous year due to the sales of the government stocks. 

Post’s forecast of MY2014/15 wheat imports remains unchanged from the previous estimate. Demand for milling wheat is likely to grow significantly in anticipation of the economic recovery despite sluggish feed wheat imports. The Ministry of Finance expects that the Thai economy will grow 4.3 percent in the first half of MY2014/15. Also, the economic recovery is expected to continue in 2015 with GDP growth reaching 5.5 percent. Feed wheat consumption is also likely to increase to around 750,000 metric tons in anticipation of the gradual recovery in shrimp farming. Shrimp production is reportedly expected to increase to 300,000 – 350,000 metric tons in 2015. 

Duty-Free Corn Imports Allowed in August 

On July 29, 2014 the military government announced that it would allow imports of corn from neighboring countries under the ASEAN Free Trade Agreement (AFTA). This action comes as a result of the delay of MY2014/15 corn harvest which is caused by unfavorable weather condition. Approximately 200,000 metric tons of Cambodian corn reportedly have been imported into Thailand under AFTA since August 1, 2014. These corn imports led to a fall in domestic prices of corn to 9.5 baht/kg ($297/MT) in August, down approximately 15 percent from the previous month