Highlights

MY2016/17 rice production is revised down to 17 million metric tons due to water shortages. MY2016/17 feed wheat imports are revised up to 2 million metric tons due to the delay in the planting of the domestic corn crop.

Executive Summary

MY2016/17 rice production is revised down to 17 million metric tons (MMT) compared to the previous forecast of 17.5 MMT (March 2016) as the government will not supply irrigated water for the main-crop rice until July 2016. Most canals have been dry since April 2016. Wheat imports are revised up in MY2015/16 and MY2016/17 due to higher-than-expected demand for feed wheat in poultry and swine feed rations. MY2015/16 feed wheat imports will likely increase to around 2.8 MMT, up 54 percent from MY2014/15 due to shortages of domestic corn and broken rice supplies. Meanwhile, MY2016/17 feed wheat imports are revised up to 2 MMT due to the concerns over the delay in the domestic corn planting period.

1. Rice

Rice, Milled

2014/2015

2015/2016

2016/2017

Market Begin Year

Jan 2015

Jan 2016

Jan 2017

Thailand

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Harvested

10270

10643

9444

9444

0

9543

Beginning Stocks

11724

11724

10095

11032

0

7632

Milled Production

18750

19404

15800

15800

0

17000

Rough Production

28409

29400

23939

23939

0

25758

Milling Rate ( 9999)

6600

6600

6600

6600

0

6600

MY Imports

300

300

300

300

0

300

TY Imports

300

300

300

300

0

300

TY Imp. from U.S.

3

0

0

0

0

0

Total Supply

30774

31428

26195

27132

0

24932

MY Exports

9779

9796

10000

8000

0

10000

TY Exports

9779

9796

10000

8000

0

10000

Consumption and Residual

10900

10600

11000

11500

0

12500

Ending Stocks

10095

11032

5195

7632

0

2432

Total Distribution

30774

31428

26195

27132

0

24932

The Royal Irrigation Department (RID) announced on April 20, 2016 that it will not supply irrigated water for the MY2016/17 main-crop rice due to water shortages. The Thai Meteorological Department (TMD) reported that cumulative precipitation in April is 39 percent below average and 33 percent lower than last year. The Thai Government's priority is to reserve water supplies for household consumption.

Despite anticipated normal precipitation in the rainy season which begins in mid-May, the RID will not supply irrigation water for rice production until reservoirs are recharged well above the dead storage levels. Due to the ongoing drought, the RID has discouraged farmers in the lower northern regions and central plains from planting the MY2016/17 main-crop rice until July 2016. Farmers in these areas heavily rely on canal water to irrigate their crops. Most of the canals in the region have been completely dry since April 2016. The RID expects the delay in the planting season will affect around 6 million rai (1 million hectares) in the irrigated areas. In addition, the delay will likely result in an acreage reduction of around 2 million rai (0.3 million hectares) in the central plains as double crops will be impossible due to the lack of water. Meanwhile, the rain-fed rice production in the northern and northeastern regions are unlikely to be affected by the RID's water restrictions. Farmers normally plant main-crop rice during the monsoon season, particularly in July and August and will be mostly harvested in December.

Post's forecast for MY2016/17 rice production revised down to 17 million metric tons, compared to 17.5 million metric tons in the previous forecast due to the acreage reduction of around 2 million rai (0.3 million hectares) caused by the delay in main-crop rice planting. However, this is still an 8-percent increase from MY2015/16 in anticipation of some recovery in off-season rice production.

1.2 Government speeding up sales of rice stocks

The government issued 2 tenders totaling 1.2 million metric tons during January to April 2016. The Ministry of Commerce announced that it sold around 0.8 million metric tons, which consisted of 0.6 million metric tons of food grade rice and 0.2 million metric tons of feed grade rice. The Rice Policy and Management Committee announced on April 25 that it will speed up the sales of the government stocks of 11.4 million metric tons during May to June 2016 to take advantage of the current tight supply situation in order to generate additional revenues. The stocks reportedly consist of approximately 0.2 million metric tons of good-quality rice, 7.5 million metric tons of sub-standard staple rice, and 3.7 million metric tons of industrial grade rice (of which 1.3 million metric tons are food/feed grade, and 2.4 million metric tons are non-food/feed grade). The government aimed to reduce non- food/feed grade rice of 2.4 metric tons for industrial uses first.

Exports

In the first quarter of 2016, rice exports totaled 2.9 million metric tons, which increased 38 percent from the same period in 2015. This is mainly due to an increase in old-crop white rice and broken fragrant rice exports, which are driven by the sales of government stocks. Exports of white rice increased significantly to 1.6 million metric tons compared to 1.1 million metric tons last year. In addition, broken fragrant rice exports increased to 0.2 million metric tons, up 78 percent from last year. Meanwhile, parboiled rice exports declined to 0.5 million metric tons, down 1 percent from last year due to limited new-crop rice supplies for parboiled rice production and competition from Indian parboiled rice which is reportedly $50/MT cheaper.

Post's forecast of rice exports in 2016 remains unchanged at 8 million metric tons due to current tight supplies of new-crop white and parboiled rice. This will likely affect Thai rice export competitiveness in Asian and African markets. Presently, the export price for 5% grade new-crop Thai white rice is $35/MT higher than Vietnamese rice.

Corn

Post's forecast for MY2016/17 corn production remains unchanged at 4.9 million metric tons. This is a 4 percent increase from MY2015/16. However, sources expect that supplies of new-crop corn are likely to enter the market late as farmers will likely delay their corn planting until June to avoid the possibility of no rain during the growing period. According to the TMD's weather forecast on April 26, 2016, precipitation is expected to be below normal levels in May and is likely to return to normal levels during June and July. Feed mills are reportedly seeking alternative feed ingredients, particularly imported feed wheat for poultry feed as a precautionary measure to deal with the delayed planting of the domestic corn crop.

Wheat

Wheat

2014/2015

2015/2016

2016/2017

Market Begin

Jul 2014

Jul 2015

Jul 2016

Year

Thailand

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Harvested

0

0

0

0

0

0

Beginning Stocks

547

547

866

865

0

885

Production

0

0

0

0

0

0

MY Imports

3488

3487

3800

4280

0

3600

TY Imports

3488

3487

3800

4280

0

3600

TY Imp. From US

646

666

0

590

0

630

Total Supply

4035

4034

4666

5145

0

4485

MY Exports

219

219

215

220

0

220

TY Exports

219

219

215

220

0

220

Feed and Residual

1850

1850

2100

2880

0

2000

FSI Cons

1100

1100

1160

1160

0

1240

Total Cons.

2950

2950

3260

4040

0

3240

Ending Stocks

866

865

1191

885

0

1025

Total

4035

4034

4666

5145

0

4485

Wheat imports are revised up to around 4.3 in MY2015/16 and 3.6 million metric tons in MY2016/17 due to higher-than-expected demand for feed wheat in poultry and swine feed rations. MY2015/16 imports of feed wheat are expected to increase to around 2.8 million metric tons, up around 55 percent from MY2014/15 due to a shortage of domestic corn and broken rice production. In addition, MY2016/17 feed wheat imports are revised up to 2 million metric tons as feed mills are reportedly seeking imported feed wheat mainly for poultry feed production due to the concerns over the delay in the domestic corn planting period. Imported feed wheat prices are reportedly 20 percent cheaper than domestic corn and 35 percent cheaper than broken rice. Feed wheat imports are mostly from Ukraine and Argentina.