Report Highlights: 

Precipitation remains below average in major corn and rice growing areas. MY2013/14 corn exports are revised up due to better-than-expected exports to the Philippines. The 2014 rice export forecast remains unchanged at 9 million metric tons as the sales of government rice stocks will likely resume in August.

Executive Summary: 

Post’s MY2014/15 corn and rice production forecast remains unchanged at 2 to 3 percent lower than last year as precipitation is still below average in major growing areas. Some corn farmers have reportedly replanted their crops due to the lack of rain. Despite the minimal rain, corn exports are better than expected, particularly to the Philippines. Meanwhile, consumption of corn is revised down slightly as farmers modify their swine feed rations by substituting broken rice in place of corn. 

1. Precipitation remained low in Major Growing Areas 

The Thai Meteorological Department (TMD) reported that precipitation was 2 percent above average in June 2014. However, precipitation is still far below normal levels in the north and the central plains, which are the major growing areas for corn and rice. The cumulative rainfall for the year is 15 to 30 percent below average. Corn production in the north accounts for 60 to 70 percent of Thailand’s total corn production. 

Despite good precipitation in the northeastern region, rainfall in some corn growing areas is 50 to 70 percent below average, particularly in the Na-khon-ratcha-si-ma province, which accounts for half of total corn production in the northeast. Approximately 10 percent of Thailand’s major corn growing areas is adversely affected by the dry conditions. Some farmers have reportedly replanted their corn in June due to the lack of rain while cassava farmers affected by an outbreak of mealy bug have shifted to corn as prices increased to around 10 baht/kg ($312/MT) compared to around 7.50 baht/kg ($234/MT) in early 2014. 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. 

2. MY2013/14 Corn Exports Revised Up 

According to the Board of Trade of Thailand, preliminary MY2013/14 corn exports totaled 1,075,474 metric tons, up significantly from the previous year. Thai corn exports continued its upward trend in June 2014, particularly to the Philippines, as a result of relatively lower export prices compared to other competitors. However, corn exports will likely decline significantly in MY2014/15 as domestic corn prices have increased significantly to around 10-11 baht/kg ($312-344/MT). The higher corn prices are driven by the shortage of corn in the domestic market as the government still does not allow corn imports to enter Thailand, particularly from Cambodia. 

According to the Thai Custom Department, total rice exports from January – June 2014 totaled 4.7 million metric tons, up 59 percent from the same period last year. Exports of white and parboiled rice nearly doubled due to the sales of government rice stocks and the elimination of the pledging program. Thai rice exports will likely continue to rise in the second half of 2014 as the government plans to resume sales of its rice stocks after it completes the inspection of rice storage facilities. Thus far, the government reported that around 70 percent of the rice storage warehouses (around 18 million metric tons) have been inspected. Around 80 percent of the government-owned rice (or approximately 10 million metric tons) is in good condition, of which approximately 3 million metric tons are broken white rice. Post’s forecast for rice exports in 2014 remain unchanged from the previous estimate of 9 million metric tons. 

3. Corn consumption revised down 

MY2013/14 corn consumption growth will likely be 2 to 3 percent lower from the previous year as swine famers substitute broken rice for corn, particularly in the second half of the year due to relatively cheaper prices. In the second half of the year, the price for broken rice declined to around 9.50 baht/kg, down 37 percent from the last year due to the increase in sales of government rice stocks and the elimination of the pledging program. Presently, the price for broken rice is approximately 10 percent lower than the price of corn. Around 1 to 2 million metric tons of broken rice is expected to be used in feed rations, of which swine feed accounts for 80 to 90 percent