Report Highlights: 

MY2013/14 corn exports are better than expected. MY2014/15 supply and demand outlook on rice, corn, and wheat remains unchanged. Rice and corn production will likely be vulnerable to the weather conditions while rice exports are likely to trend upward due to the sales of government stocks.

Executive Summary: 

Post revises its Marketing Year (MY) 2013/14 corn export forecast to around to 940,000 metric tons as Thai corn prices are more competitive in the international market, particularly in the Philippines and China. Meanwhile, rice and corn production as well as exports in MY2014/15 remains unchanged from the previous forecast. The Thai Meteorological Department (TMD) still expects below normal average precipitation in 2014 due to higher probabilities of the El Nino phenomenon in the latter half of 2014. Rice exports are expected to rise in 2014 – 2015 as the government continues to sell its rice stocks to pay for loans incurred under its rice pledging program. Post’s forecast for wheat and pulses remain unchanged. 

MY2013/14 and 2014/15 Rice and Corn Production Remains Unchanged 

According to the Royal Irrigation Department (RID), reservoir levels remain critical in the northern and central regions of Thailand. As a result, the planted area for the late off-season rice crop in these regions declined significantly as the RID cut its water discharge. The second tranche of the current off-season rice cultivation accounts for around 10 percent of total off-season crop cultivation. In addition, farm-gate prices for white rice paddy decreased toward the pre-food price crisis in 2008 of around 6,000 to 7,000 baht per metric ton ($185-215/MT). MY2013/14 offseason rice production is likely to decline around 5 percent, which is unchanged from the previous forecast. 

The TMD expects below normal average precipitation in May 2014, which is typically the beginning of the monsoon season. Precipitation is likely to be 6 to 10 percent below normal average in major rice growing areas in the north, northeast, and central plains. The TMD forecast precipitation in 2014 to be lower than the normal average due to the higher probability of “El Nino” weather conditions in the latter half of 2014 (based on the International Research Institute for Climate and Society’s latest forecast of April 2014). This will likely reduce average yields for the main rice crop and corn production in MY2014/15. Post’s forecast for the MY2014/15 rice and corn production remains unchanged from its previous estimates. Post expects a reduction in rice and corn production by 2 to 3 percent from the previous year due to the reduction in average yield. Meanwhile, planted area for the rice crop will likely remain stable as the profitability of other crops, particularly sugarcane, is uncertain due to a drop in global prices. 

MY2013/14 Corn Exports Revised Up and Rice Exports Trend Upward in 2014-2015 

MY2013/14 corn exports are revised up to approximately 940,000 metric tons, a significant increase from the previous year. According to the Board of Trade of Thailand, corn exports increased to 304,669 metric tons during January – March 2014, up significantly from 6,467 metric tons in the same period last year due to competitive prices for Thai corn exports. Current prices are around $240-280/MT (FOB) compared to $350-360/MT in the previous year. Around 85 percent of Thai corn exports were exported to the Philippines and China. For the first nine months of MY2013/14, corn exports increased significantly to 926,834 metric tons. However, current domestic corn prices are trending upward as domestic demand for feed continues to grow and traders are concerned about a possible shortage of domestic corn production in MY2014/15. 

Thai rice exports are expected to climb to 9-10 million metric tons in 2014 and 2015, unchanged from the previous forecast. According to the Thai Customs Department, Thai rice exports increased to 2.2 million metric tons in the first quarter of 2014, up 47 percent from the same period last year. Thai rice prices are beginning to be more competitive with Vietnamese and Indian rice as the government continues to sell its rice stocks. The government has issued public tenders totaling 3.3 million metric tons during January – April 2014, of which 1.9 million metric tons are 5% grade white rice. This total includes 1.6 million metric tons of rice that was tendered via the Agricultural Futures Exchange of Thailand (AFET). The government expects to issue additional tenders of approximately 0.4 million metric tons via AFET in May 2014. The revenue generated from the sales of its rice stocks will be provided to the Bank for Agriculture and Agricultural Cooperatives (BAAC) to finance the delayed payments incurred under the MY2013/14 Main-Crop Rice Paddy Pledging Program. The government is reportedly holding 15 to 16 million metric tons of rice stocks, of which around 2 to 3 million metric tons are from MY2013/14 main-crop rice stocks