Highlights

MY2017/18 cultivation for main-crop rice and corn is occurring much sooner than MY2016/17 cultivation due to favorable rainfall and sufficient reservoir levels. The sale of the government’s food-quality rice stocks has helped maintain Thai rice competitiveness in international markets. However, the sale of the government’s feed-quality rice stocks has created downward pressure on domestic corn prices and has lowered swine feed costs offsetting some of the effects of the government’s import restrictions on feed wheat.

Executive Summary

MY2017/18 main-crop rice and corn cultivation is well above MY2016/17 due to favorable rainfall and sufficient reservoir levels. The government has continued to sell the rice stocks that remain from the MY2011/12 – MY2013/14 pledging programs. The sale of government stocks has helped maintain Thai rice export momentum during the first five months of MY2016/17. However, the sale of feed-quality rice stocks has created downward pressure on farm-gate prices for corn as feed mills are substituting rice for corn and imported feed wheat in swine feed rations. Additionally, import demand for feed wheat has continued to decline due to the government’s import restrictions.

1. Rice Update

1.1 MY2017/18 main-crop rice planting well progressed above last year

MY2017/18 main-crop rice cultivation is occurring much sooner than last year in irrigated areas due to sufficient irrigation supplies. As of May 19, 2017, the Royal Irrigation Department (RID)’s crop progress report indicated that approximately 1.6 million rai (0.3 million hectares) of MY2017/18 main-crop rice has been planted in irrigated areas, compared to 0.03 million rai (4,800 hectares) for the same period of MY2016/17. Irrigated area accounts for around 30 percent of total main-crop rice acreage. As of May 18, 2017, water supplies in major reservoirs totaled 3.9 billion cubic meters. These reservoir levels are more than double last year’s water levels even though the RID has already supplied water for irrigation for MY2016/17 off-season rice cultivation. MY2016/17 off-season planted rice acreage is more than double MY2015/16 off-season rice acreage. Above normal precipitation during January – May 2017 has helped keep the reservoirs well supplied. The cumulative precipitation between January 1 – May 14, 2017, was 60 percent above average precipitation and triple the amount of precipitation for the same period last year. Farmers in non-irrigated area also have been preparing the land for MY2017/18 main-crop rice, particularly in the northeastern region which accounts for approximately half of total main-crop rice production. Farmers in this region will begin to grow rice when periodic rain begins and will have completed planting rice by August. Post’s forecast for rice production in MY2017/18 remains unchanged at 19.5 million metric tons which is approximately a 5 percent increase from MY2016/17 due mainly to the recovery of main-crop rice production in irrigated areas.

1.2 Thai Government to tender the last remaining food-quality rice stocks from the MY2011/12 – MY2013/14 pledging programs.

On May 24, 2017, the government issued a tender for the last 1.8 million metric tons of food-quality rice stocks which consist of approximately 1.5 million metric tons of fragrant rice, 0.2 million metric tons of white rice and 0.1 million metric tons of broken rice and glutinous rice. The government is expected to finalize the sale of these food-quality rice stocks in early June 2017, together with the sale of 0.5 million metric tons of the one-million metric ton tender for deteriorated rice stocks issued on April 28, 2017. Traders expect that there will be strong demand for the remaining food-quality rice stocks as they can be exported to African markets at competitive prices. If the remaining 1.8 million metric tons of food-quality rice stocks are sold, then the government will have sold 3.8 million metric tons of food-quality rice stocks since January 2017. Meanwhile, the sale of 0.5 million metric tons of deteriorated rice will be mostly used for ethanol production. The government has also sold 1.6 million metric tons of feed-quality rice stocks during the same time period. A large portion of the feed-quality rice stocks are reportedly being used as a substitute for corn and for imported feed wheat in swine feed rations due to its relatively cheaper price.

After completing the sale of the May 24, 2017 food-quality rice tender and the April 28, 2017 deteriorated rice tender, the government is expected to continue to hold to 2 to 3 million metric tons of rice stocks, of which approximately 2.2 million metric tons are feed-quality rice stocks. The government is expected to issue a new tender for these remaining feed-quality rice stocks in late June 2017. However, the sale of the remaining feed-quality rice stocks will be challenging as supplies of new-crop corn will be entering the market in July 2017, creating downward price pressure on feed quality rice.

Rice Exports Update

Thai rice exports during January - April 2017, totaled 3.6 million metric tons. This is approximately a 2 percent increase from the same period in 2016, reversing the first quarter’s 6 percent decline due to strong export growth of white and parboiled rice in April 2017 as a result of the sale of the government’s old-crop rice stocks and the recovery in new-crop off-season rice production (MY2016/17). Exports of parboiled rice doubled in April 2017, totaling approximately 0.3 million metric tons destined mainly to African countries. This helped accelerate export of parboiled rice in the first four months of 2017 to 0.8 million metric tons which increased 22 percent from the same period last year. Also, white rice exports in April 2017 increased approximately 30 percent from the same period last year, which helped partially offset the first quarter’s 19 percent decline. In the first four months of 2017, white rice exports totaled approximately 2 million metric tons, down 9 percent from the same period last year.

The Ministry of Commerce reported preliminary rice exports during January – May 2017 at 4.5 million metric tons. This is approximately a 5 percent increase from the same period last year mainly due to strong import demand for approximately 0.2 million metric tons of white and fragrant rice from Iran in May 2017. Additionally, foreign buyers actively purchased Thai rice in response to the rare import opportunity to fulfill the private and government contracts to Iran. This pushed Thai rice export prices to 390-400 USD/MT for 5% grade white rice and parboiled rice in May 2017, which is approximately 20-30 USD/MT (8 percent) above the average export prices for the first quarter of the year. However, the price difference between Thai and Indian parboiled rice declined to 30 USD/MT in May 2017, compared to 60-70 USD/MT in the same period last year. Additionally, the price different between Thai and Vietnamese white rice converged to a typical 20 USD/MT in May 2017.

Therefore, Post’s forecast for Thai rice exports remains unchanged at 10 million metric tons in MY2016/17. This is approximately an 1 percent increase from last year as Thai rice exports are expected to maintain the current monthly export volume of 0.8 to 0.9 million metric tons for the rest of the year. Thai rice export prices are likely to remain competitive in the Middle East and African countries due to the recovery in the off-seasons rice production (MY2016/17) and the sale of government old-crop rice stocks.

Corn Update: Higher-than-expected MY2016/17 corn exports

Post’s forecast for MY2016/17 corn exports is revised up to approximately 0.7 million metric tons, compared to 0.5 million metric tons in the previous forecast. This is due to higher-than-expected exports of corn during the first 10 months of MY2016/17. At 0.6 million metric tons, corn exports for the first 10 months of MY2016/17 are three times the exports for the first 10 months of MY2015/16. Destined mostly to the Philippines and Vietnam, larger exportable supplies of corn reflect the substitution of imported feed wheat and feed-quality rice stocks for corn in swine feed ration. Additionally, feed mills are likely to hold minimal carry-over stocks of corn as they expect periodic harvesting of MY2017/18 corn production to begin in July 2017 due to favorable weather conditions. The Thai Meteorological Department reported that cumulative precipitation in the major growing areas in the northern region and the central plains during January 1 – May 14, 2017 is nearly double the cumulative amount received during the same period in 2016. Corn cultivation in these regions accounts for approximately 80 percent of total Thai corn production.

In April 2017, farm-gate prices for corn further declined to 5,970 baht per metric ton (173USD/MT), down 7 percent from the previous month and down 22 percent from the same period in 2016. The lower corn prices occurred despite the government implementing measures to stabilize domestic corn prices through requiring domestic corn to be purchased in order to import feed wheat. Domestic corn prices are expected to continue to face downward pressure due to the sale of feed-quality rice stocks which is used as a substitute for locally produced corn and imported feed wheat in swine feed rations.

Wheat Update

During the first nine months of MY2016/17, wheat imports totaled 3.2 million metric tons. This is a 7 percent reduction from the same period in MY2015/16 due mainly to a reduction in imported feed wheat which declined to 2.3 million metric tons, down 9 percent from the same period in MY2015/16. The government has not yet finalized the request from the Thai Feed Mill Association for an exemption on the domestic corn absorption requirements for certain industries.

Meanwhile, milling wheat imports increased slightly to 0.8 million metric tons partially as the result of the sustained domestic economic recovery. The National Social and Economic Development Board (NESDB) reported that the Thai economy grew at an annual rate of 3.3 percent in the first quarter of 2017. This economic growth momentum supports NESDB’s forecast of 3-4 percent growth in 2017. U.S. wheat imports in MY2016/17 increased to approximately 0.5 million metric tons, up 12 percent from the same period in MY2015/16.

Post’s forecast for total wheat imports remains unchanged at 3.6 million metric tons in MY2016/17 and 3 million metric tons in MY20217/18. This is a 23 percent and 17 percent reduction in total wheat imports due to the government’s import restrictions on feed wheat as well as the rice substitution for feed wheat in swine feed ration.

Thailand’s Rice Production, Supply and Demand

Rice, Milled

2015/2016

2016/2017

2017/2018

Market Begin Year

Jan 2016

Jan 2017

Jan 2018

Thailand

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Harvested

9444

9444

10083

10083

10480

10480

Beginning Stocks

11270

11270

8403

8387

6253

6187

Milled Production

15800

15800

18600

18600

19500

19500

Rough Production

23939

23939

28182

28182

29545

29545

Milling Rate

6600

6600

6600

6600

6600

6600

MY Imports

300

300

250

200

250

200

TY Imports

300

300

250

200

250

200

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

27370

27370

27253

27187

26003

25887

MY Exports

9867

9883

10000

10000

10000

10000

TY Exports

9867

9883

10000

10000

10000

10000

Consumption and Residual

9100

9100

11000

11000

11500

11500

Ending Stocks

8403

8387

6253

6187

4503

4387

Total Distribution

27370

27370

27253

27187

26003

25887

Yield ( Rough)

2.5348

2.5348

2.795

2.795

2.8192

2.8192

Thailand’s Rice Paddy Area, Production, and Yield

2015\16

2016\17

2017\18

Area (Million Hectares) Cultivation Harves

Main Crop

Second Crop

Total

Main Crop

Second Crop

Total

Main Crop

Second Crop

Total

9.096

8.709

1.055

0.735

10.151

9.444

8.745

8.373

1.900

1.710

10.645

10.083

8.960

8.720

1.920

1.760

10.880

10.480

Production

( Million ton)

Rough

Rice

20.973

13.842

2.966

1.958

23.939

15.800

20.909

13.800

7.273

4.800

28.182

18.600

21.970

14.500

7.575

5.000

29.545

19.500

Yeild

2.408

4.035

2.535

2.497

4.253

2.795

2.519

4.304

2.819


Thailand’s Corn Production, Supply and Demand

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

1100

1100

Beginning Stocks

139

139

172

172

172

172

Production

4700

4700

5200

5200

4900

4900

MY Imports

600

600

600

600

700

700

TY Imports

600

600

600

600

700

700

TY Imp. from US

2

0

0

0

0

0

Total Supply

5439

5439

5972

5972

5772

5772

MY Exports

367

367

500

700

200

100

TY Exports

439

310

600

700

200

100

Feed and

4800

4800

5200

5000

5350

5300

Residual FSI

100

100

100

100

100

100

Total Cons.

4900

4900

5300

5100

5450

5400

Ending Stocks

172

172

172

172

122

272

Total Distribution

5439

5439

5972

5972

5772

5772

Yield

4.3119

4.3119

4.4521

4.4521

4.4545

4.4545

Wheat

Wheat

2015/2016

2016/2017

2017/2018

Market Begin

Thailand

Jul 2015

Jul 2016

Jul 2017

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

752

545

Production

0

0

0

0

0

0

MY Imports

4872

4691

3600

3600

3000

3000

TY Imports

4872

4691

3600

3600

3000

3000

TY Imp. from US

679

632

0

650

0

670

Total Supply

5737

5556

4602

4485

3752

3545

MY Exports

235

235

250

220

200

220

TY Exports

235

235

250

220

200

220

Feed and Residual

3300

3276

2400

2500

1500

1500

FSI Consumption

1200

1160

1200

1220

1300

1300

Total Consumption

4500

4436

3600

3720

2800

2800

Ending Stocks

1002

885

752

545

752

525

Total Disctribution

5737

5556

4602

4485

3752

3545

Yield

0

0

0

0

0

0