Report Highlights: 

TH4047 MY2014/15 rice and corn production remained unchanged from the previous forecast. MY2013/14 Corn exports are revised up to 1 million metric tons. The military government that just seized power is seeking loans to expedite the overdue payments under the MY2013/14 Main-Crop Rice Paddy Pledging Program.

Executive Summary: 

Post revises its Marketing Year (MY) 2013/14 corn export forecast to 1 million metric tons due to strong demand from China and the Philippines. Meanwhile, MY2014/15 rice and corn production forecast remains unchanged from the previous forecast due to dry conditions at the beginning of the rainy season. The Military Government that seized power May 22 calling itself the National Council for Peace and Order (NCPO) is seeking loans to expedite the overdue payments of approximately 90 billion baht ($2.8 billion) under the MY2013/14 Main-Crop Rice Paddy Pledging Program. This would allow NCPO to reduce rice sales to boost current very low domestic prices but NCPO’s intent still is not clear. Post’s forecast of wheat and pluses remain unchanged.

1. MY2014/15 Main-Crop corn slow to plant in dry conditions

The rainy season began in May. The Thai Meteorological Department (TMD) reported below normal average precipitation in May 2014. Precipitation is likely to be 7-15 percent below normal average precipitation in major rice and corn growing areas in the North, Northeastern, and Central Plains. Also, TMD expects precipitation in June 2014 to be approximately 10 percent below the normal average. Corn farmers in some areas reportedly delayed their cultivation due to current rain deficiency. Also, some of them shifted to cassava crop. Post’s forecast for the MY2014/15 rice and corn production remains unchanged from the previous estimates that expect a reduction in rice and corn production by 2 to 3 percent from the previous year.

2. Rice exports on track driven by the sales of government rice stocks and the suspension of pledging program 

The government has issued public tenders of approximately 4 million metric tons since January 2014. The tenders consisted of 2.2 million metric tons of 5% grade white rice, 1.1 million metric tons of fragrant rice, and around 0.7 million metric tons of broken rice. In the recent tender in May 2014, the bids were reportedly below the market price by 24-33 percent for 5% grade white rice and 16 percent for fragrant rice. According to the Thai Custom Department, total rice exports from January 1 – April 30, 2014 totaled 2.9 million metric tons, up 48 percent from the same period last year, mainly due to the surge in white and parboiled rice exports. Exports of white rice doubled to approximately 1 million metric tons as Thai rice prices are more competitive with Vietnamese and Indian rice due to the sales of government rice stocks. Average export prices of 5% grade white rice declined significantly to $395/MT, down 29 percent from $558/MT in the same period last year. Also, exports of parboiled rice increased to 0.6 million metric tons, up 45 percent from the same period last year due to an increase in exportable supplies of MY2013/14 Off-Season rice paddy for parboiled rice production as the government discontinued its pledging program due to a lack of financial resources. 

3. MY2013/14 Corn exports revised up to 1 million metric tons 

MY2013/14 corn exports are revised up to 1 million metric tons due to competitive prices for Thai corn. According to the Board of Trade of Thailand, corn exports totaled 970,938 metric tons during July 2013 – April 2014, up significantly from 7,307 metric tons in the same period last year. Most corn exports were exported to China and the Philippines. Meanwhile, MY2014/15 corn exports are likely to be marginal in anticipation of tighter domestic supplies. 

4. Sales of rice stocks may slow down after the coup 

Current rice stocks are around 15 million metric tons, of which 3-4 million metric tons are broken rice. After the military coup on May 22, 2014 the new Military Government calling itself the National Council for Peace and Order (NCPO) announced it will seek loans for the Bank for Agriculture and Agricultural Cooperatives (BAAC) to expedite the overdue payments to farmers under the MY2013/14 Main-Crop Rice Paddy Pledging Program. Presently, around 0.8 million farmers remain unpaid totaling approximately 90 billion baht ($2.8 billion). Around 40 billion baht ($1.3 billion) of the loans will be from the BAAC and the balance will be from other financial institutions. The NCPO announced that all farmers will be paid by the end of June 2014. The NCPO will inspect the government rice stocks nationwide before further decision on the sales of its rice stocks. The aggressive sales of rice stocks over the past four months to finance the MY2013/14 Main-Crop Rice Paddy Pledging Program caused a sharp reduction in farm-gate price of rice paddy. Presently, farm-gate prices of white rice paddy (15% moisture content) are at 6,000 – 7,000 baht per metric ton ($188-219/MT)