Highlights

MY2017/18 main-crop rice and corn planting is unlikely to be delay due to favorable rainfall and a recovery in reservoir levels. Domestic corn prices remain under downward pressure despite the domestic corn absorption requirements under the new import regulations for feed wheat. Feed wheat imports have declined significantly as a result of the new regulations.

Executive Summary

MY2017/18 main-crop rice and corn planting is unlikely to be delay due to favorable rainfall and a recovery in reservoir levels. Post’s rice production forecast remains unchanged at 19.5 million metric tons, up 5 percent from MY2016/17 in anticipation of a recovery in main-crop rice production due to sufficient irrigation supplies. The export forecast for rice in 2017 remains unchanged at 10 million metric tons driven by the sale of government stocks and the recovery of white rice supplies. The government is expected to sell all of their food-quality rice stocks in 2017 which totals approximately 3 million metric tons. Post’s forecast for corn production remains unchanged at 4.9 million metric tons, down 6 percent from MY2016/17 in anticipation of an acreage reduction in response to unattractive returns. Despite the domestic corn absorption requirements under the new import regulations for feed wheat, farm-gate prices for corn remain under downward pressure in line with world corn prices. Additionally, the recent sale of 1.4 million metric tons of government feed-quality rice stocks to swine feed industry will likely reduce domestic demand for corn and imported feed wheat throughout 2017. Feed wheat imports have declined significantly since the new import regulations were implemented in January 2017. Post foresaw this trend, so the forecast for wheat imports remains unchanged at 3.6 million metric tons in MY2016/17 and 3 million metric tons in MY2017/18.

1.Rice Update

1.1 No Delay in MY2017/18 Main-Crop Rice Planting

Unlike in MY2016/17 when severe drought delayed and prevented farmers from planting main-crop rice in many irrigated areas in the lower northern region and the central plains, farmers will be able to plant MY2017/18 main-crop rice as usual in May 2017 due to sufficient water supplies. Main-crop rice acreage in these areas accounts for approximately 20 percent of total main-crop rice production. The government recently announced their support for the Royal Irrigation Department’s plan to supply water for main-crop rice planting in May 2017, compared to last year when irrigation supplies were not available until August 2016 which was too late for main-crop rice planting in many locations. As of April 18, 2017, the RID reported that water supplies in major reservoirs totaled 4.9 billion cubic meters, which is more than double last year’s record low levels. Therefore, Post’s forecast for MY2017/18 rice production remains unchanged at 19.5 million metric tons which is approximately a 5 percent increase from MY2016/17 in anticipation of a recovery of main-crop rice production.

On April 5, 2017, MY2016/17 off-season rice planting area totaled approximately 12 million rai (1.9 million hectares), of which about 8 million rai (1.3 million hectares) were in irrigated areas. Second off-season rice acreage increased significantly to 0.2 million rai (0.03million hectares), from 31,000 rai (4,960 hectares) the previous year due to sufficient irrigation supplies. This year, the RID has provided irrigation supplies to rice farmers through April 2017 even though the government is also encouraging rice farmers to shift to alternative crops that are less water intensive. Presently, approximately 60 percent of MY2016/17 off-season rice production has been harvested. The MY2016/17 off-season rice harvested area will likely more than double last year’s off-season acreage due to sufficient irrigation supplies. As a result, MY2016/17 off-season rice production should recover from the drought-triggered record low production in MY2015/16. Post’s forecast for MY2016/17 rice production remains unchanged at 18.6 million metric tons which is an 18 percent increase from MY2015/16.

1.2 Exports

Thai rice exports during January - March 2017 totaled 2.7 million metric tons, down 6 percent from the same period last year due to a reduction in white rice exports. Exports of white rice declined to 1.3 million metric tons, down 19 percent from the same period last year due mainly to competition from Vietnamese rice which was approximately 30-40 USD/MT cheaper. Additionally, the government suspended the sale of old-crop white rice stocks during the harvest of main-crop rice in January and February 2017. Typically, old-crop white rice from government stocks is very competitive in the African market as the price is 30-35 USD/MT cheaper than new-crop white rice. However, at the same time, exports of parboiled rice increased 10 percent and fragrant rice increased 4 percent from the same period last year, totaling 0.5 and 0.7 million metric tons, respectively. Post’s forecast for Thai rice exports remains unchanged at 10 million metric tons in MY2016/17 and MY2017/2018, up 1 percent from last year, driven by the government’s sale of the remaining rice stocks in the second and third quarter of 2017.

1.3 Stocks

By the end of April 2017, the government rice stocks are expected to decline to approximately 5 million metric tons consisting of 1.7 million metric tons of food-quality rice, 2.2 million metric tons of feed-quality rice, and 1.1 million metric tons of deteriorated rice. This is a 38 percent reduction from the amount of rice held by the government at the start of 2017. From January to April 2017, the government announced the sale of approximately 3 million metric tons of rice from two tenders issued on February 16, 2017 and March 23, 2017. These sales consisted of 1.4 million metric tons of food-quality rice, and 1.6 million metric tons of feed-quality rice. Around 1.4 million metric tons of the feed-quality rice was sold to Thai swine feed mills. Additionally, the Thai government has announced that it will issue a new tender for 1 million metric tons of deteriorated rice stocks on April 28, 2017. The deteriorated rice stocks will mainly be used for ethanol production. The government also plans to retender the remaining 1.7 million metric tons of food-quality rice stocks in May 2017, followed by tenders for feed quality and deteriorated rice in June and July 2017, respectively. Post’s forecast for MY2016/17 rice stocks remains unchanged at around 6 million metric tons, a decline from MY2015/16 due to the sale of government stocks. Around half of the forecasted MY2016/17 rice stocks are expected to be government owned old-crop rice.

1.4 Policy Update

The government did not implement the on-farm pledging program for MY2016/17 off-season rice. However, the government did extend the Interest-Rate Subsidy Program to encourage rice millers and traders to store MY2016/17 off-season rice between April 1 – July 31, 2017 in order to stabilize farm-gate prices of off-season rice. Off-season rice currently has a farm-gate price of 7,300 – 7,800 baht per metric ton (217-226 USD/MT), compared to 7,500 – 8,000 baht per metric ton (217-232 USD/MT) for the same period last year. Rice millers participating in this program will receive a 3 percent interest rate discount from the banks for 2 to 6 months of storage. This is a slight reduction from the 4 percent interest rate discount that was provided for MY2016/17 main-crop rice paddy. Approximately 3.8 million metric tons were stored under this program from November 1, 2016 – March 31, 2017. The government paid 368 million baht ($10.5 million dollar) as a compensation for the interest rate discount the banks provided to the farmers.

2.Corn Update

Despite the domestic corn absorption requirement under the new import regulations for feed wheat, farm-gate prices for corn remain under downward pressure. In the first quarter of 2017, farm-gate prices for corn averaged 6,280 baht per metric ton (182 USD/MT). This is a 22 percent reduction from average farm-gate prices of around 8,100 baht per metric ton (235 USD/MT) for the same period last year. Feed mills reportedly have had large inventories of feed wheat during the first quarter of 2017 that they imported prior to the implementation of the new import regulations. Additionally, large feed mills are only purchasing corn grown on privately owned land due to concerns about the EU potentially banning livestock products raised on corn-based feed from deforested areas. Corn from untitled land is reportedly being sold to export markets. However, export prices for corn have declined approximately 40 percent from last year due to lower prices on the world market. During the first eight month of MY2016/17, corn exports totaled 0.4 million metric tons, a significant increase from the same period last year in which corn exports totaled only 67,350 metric tons. Also, the sale of 1.4 million metric tons of feed-quality rice from government stocks for the swine feed industry in late April 2017, will likely reduce demand for domestic corn in swine feed rations throughout 2017 as the sale price of feed-quality rice stocks is approximately 30 percent lower than the domestic price for corn. MY2017/18 corn planting has reportedly begun in the main growing areas in the northern region due to favorable weather conditions. Corn production in this region accounts for approximately 70 percent of total corn production. Some corn areas in the northeastern region have reportedly shifted to sugarcane production due to relatively higher return. Farm-gate prices for sugarcane increased 28 percent in the first quarter of 2017. Post’s forecast for corn production remains unchanged at 4.9 million metric tons. This is a 6 percent reduction from MY2016/17 in anticipation of an acreage reduction.

3. Wheat update

Thai Feed Mill Association (TFMA) is negotiating with the government over the new import regulations on feed wheat that were implemented in January 2017. These new regulations require feed mills to purchase domestic corn prior to importing feed wheat (at a 3:1 domestic absorption rate of imported feed wheat/domestic corn). The TFMA wants the government to reconsider the corn absorption rates for feeds which do not typically use corn, such as fish feed, shrimp feed, and pet food. However, the government is reportedly considering an exemption only for the shrimp feed industry and may allow them to import approximately 110,000 metric tons of feed wheat without being required to use domestic corn. This figure is based on the amount of feed wheat that has historically been imported for shrimp feed production, and accounts for 10-20 percent of the total shrimp feed ration. The government is also considering a 2:1 domestic corn absorption rate for a pet food producer that requires approximately 20,000 metric tons of feed wheat annually. The Ministry of Commerce in consultation with the Ministry of Agriculture and Cooperatives’ Department of Livestock Development and Department of Fishery is seeking cabinet approval which may be granted in the next couple of months.

The new feed wheat import regulations have caused a significant reduction in Thai feed wheat imports. During January – February 2017, imports of feed wheat totaled 226,170 metric tons, down 60 percent from the same period last year, with the quantity imported from the Ukraine declining 86 percent. For the first eight months of MY2016/17, all wheat imports totaled 2.9 million metric tons. This is a 7 percent reduction from the same period in MY2015/16 due mainly to the reduction in imported feed wheat which declined to approximately 2.1 million metric tons, down 8 percent from the same period in MY2015/16. Also, imports of milling wheat declined approximately 4 percent due to lower imports of Canadian wheat due to concerns about crop quality. Meanwhile, U.S. wheat imports increased to approximately 0.4 million metric tons, up 4 percent from the same period of MY2015/16. Post’s forecast of declining wheat imports remains unchanged at 3.6 million metric tons in MY2016/17 and 3 million metric tons in MY2017/18 due to the reduction in feed wheat imports. In addition to the new import regulations, the sale of government feed-quality rice stocks of around 1.6 million metric tons in April 2017 will reduce import demand for feed wheat in swine feed rations as the price of feed-quality rice stocks is 30-35 percent lower than the price for imported feed wheat.

Rice

Rice, Milled

2015/2016

2016/2017

2017/2018

Market Begin Year

Jan 2016

Jan 2017

Jan 2018

Thailand

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Harvested

9444

9444

10083

10083

0

10480

Beginning Stocks

11270

11270

8403

8387

0

6187

Milled Production

15800

15800

18600

18600

0

19500

Rough Production

23939

23939

28182

28182

0

29545

Milling Rate (.9999)

6600

6600

6600

6600

0

6600

MY Imports

300

300

250

200

0

200

TY Imports

300

300

250

200

0

200

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

27370

27370

27253

27187

0

25887

MY Exports

9867

9883

10000

10000

0

10000

TY Exports

9867

9883

10000

10000

0

10000

Consumption and Residual

9100

9100

10300

11000

0

11500

Ending Stocks

8403

8387

6953

6187

0

4387

Total Distribution

27370

27370

27253

27187

0

25887

Corn

Corn

2015/2016

2016/2017

2017/2018

Market Begin

Jul 2015

Jul 2016

Jul 2017

Thailand

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Harvested

1090

1090

1168

1168

0

1100

Beginning Stocks

139

139

172

172

0

372

Production

4700

4700

5200

5200

0

4900

MY Imports

600

600

600

600

0

700

TY Imports

600

600

600

600

0

700

TY Imp. from US

2

0

0

0

0

0

Total Supply

5439

5439

5972

5972

0

5972

MY Exports

367

367

400

500

0

300

TY Exports

439

310

400

500

0

300

Feed and Residaul

4800

4800

5200

5000

0

5300

FSI

100

100

100

100

0

100

Total Consumption

4900

4900

5300

5100

0

5400

Ending Stocks

172

172

272

372

0

272

Total Consumption

5439

5439

5972

5972

0

5972

Wheat

Wheat

2015/2016

2016/2017

2017/2018

Market Begin

Jul 2015

Jul 2016

Jul 2017

Thailand

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Harvested

0

0

0

0

0

0

Beginning Stocks

865

865

1002

885

0

545

Production

0

0

0

0

0

0

MY Imports

4872

4691

3600

3600

0

3000

TY Imports

4872

4691

3600

3600

0

3000

TY Imp. from US

679

632

0

650

0

670

Total Supply

5737

5556

4602

4485

0

3545

MY Exports

235

235

250

220

0

220

TY Exports

235

235

250

220

0

220

Feed and Residual

3300

3276

2400

2500

0

1500

FSI

1200

1160

1200

1220

0

1300

Total

4500

4436

3600

3720

0

2800

Ending Stocks

1002

885

752

545

0

525

Total Distribution

5737

5556

4602

4485

0

3545