Highlights

Rice production is expected to be larger than previously forecasted in MY2016/17 and MY2017/18 due to attractive returns compared to corn. Government rice stocks continued to decline in June 2017, driven by domestic and export demand. Import restrictions on feed wheat are likely to remain in place in MY2017/18.

Executive Summary

MY2016/17 rice production is higher than expected, totaling 19.2 million metric tons. Furthermore, rice production will likely increase to 20.4 million metric tons in MY2017/18 due to favorable weather conditions and attractive returns. However, rice stocks are revised significantly down to 4.5 million metric tons in MY2016/17 and 3.6 million metric tons in MY2017/18 as the government continues to sell its rice stocks, particularly in June 2017 when there was a surge in domestic and export prices. Thai rice export prices increased significantly in June 2017 reaching price levels last recorded in late 2013 due to strong export demand for white and parboiled rice. Rice exports are revised up to a record 11 million metric tons in MY2016/17. Domestic rice consumption is revised up to record levels as well due to the emerging demand for deteriorated rice and feed/industrial quality rice being sold from the government stocks.

Farm-gate prices for corn are still below the government target of 8,000 baht per metric ton (237 USD/MT) despite the domestic absorption requirements for imported feed wheat. Corn is also being substituted by rice in poultry and swine feed rations due to relative cheaper prices. As a result, the government is likely to maintain the corn domestic absorption requirements for feed wheat imports in MY2017/18. Additionally, the government is considering a direct payment to support acreage expansion of MY2017/18 off-season corn.

Post’s forecast for a reduction in wheat imports during MY2016/17 and MY2017/18 remains unchanged as the government will likely maintain the import restriction on feed wheat which is mainly used in poultry and swine feed ration.

  • Rice Update 1.1 Production

Post’s forecast for MY2016/17 rice production is revised up to 19.2 million metric tons. This is a 22 percent increase from MY2015/16 due to higher-than-expected offseason rice production. MY2016/17 off-season rice production is expected to increase to 5.4 million metric tons, which is more than double last year’s level due to favorable weather conditions and sufficient water supplies for irrigation. MY2016/17 off-season rice crop was marginally affected by drought and pest damage with damaged area totaling approximately 0.2 million rai (0.03 million hectares). The MY2016/17 off-season rice harvest increased to approximately 12 million rai (1.9 million hectares), up 155 percent from MY2015/16. Although the Royal Irrigation Department (RID) has already supplied water for irrigation for MY2016/17 off-season rice, current water supplies are still well above last year’s levels due to above normal precipitation. The Thai Meteorological Department reported that cumulative precipitation during January 1 – June 18, 2017 doubled the amount of precipitation received for the same period last year, particularly in the central plains which are a major growing area of off-season rice.

Additionally, MY2017/18 rice production is revised up to 20.4 million metric tons. This is a 6 percent increase from MY2016/17 in anticipation of an acreage expansion of main-crop and off-season crop. Presently, the farm-gate price for white rice has rebounded to 8,000 – 9,000 baht per metric ton (237-266 USD/MT), which is the same price level as in MY2013/14 when the previous government’s populist rice pledging policy program was implemented. Farmers in the central plains will likely continue their rice planting right after their MY2016/17 second off-season rice is harvested in July 2017 due to attractive farm-gate price. Additionally, anticipated seasonal flooding in these areas is expected to be minimal due to sufficient reservoir capacities. While current reservoir volume is well above last year’s levels, the reservoir volume is still far below record 2011 levels when severe floods hit the central plains. Moreover, MY2017/18 off-season rice planting is expected to remain attractive due to sufficient water supplies. Farm-gate prices are also likely to be steady at 8,000 – 9,000 baht per metric ton (237-266 USD/MT) as the government has run down its old-crop rice stocks accumulated under the MY2011/12 – MY2013/14 pledging programs. In addition, the government will maintain its interest-rate subsidy program to help rice mills/traders hold rice stocks during the seasonal harvest. This will make the government’s campaign to reduce off-season rice planting less effective. In MY2015/16, only 140,000 rai (22,400 hectares) of off-season rice were reportedly shifted to corn, which is far below the 2.5 million rai (0.4 million hectares) target.

1.2 Consumption

MY2016/17 rice consumption is revised up to a record 12.3 million metric tons. This is a 35 percent increase from MY2015/16 due to the utilization of rice from the government stocks for the production of energy (non-ethanol), fertilizer, and poultry and swine feed. Around 1 million metric tons of rice stocks will be used for fertilizer and energy production. Feed-quality rice, totaling approximately 2.4 million metric tons, will be used for swine feed and poultry feed acting as a substitution for corn and imported feed wheat. MY2017/18 rice consumption is expected to decline to approximately 11.5 million metric tons; down 7 percent from MY2016/17 in anticipation of a reduction in rice utilization by poultry feed producers, power plants, and fertilizer manufacturers due to limited supplies of feed-quality and deteriorated rice. Approximately 90 percent of the 4.8 million metric tons of the government’s industrial-quality rice and deteriorated rice stocks will have been depleted in 2017.

1.3 Stocks

Post revises down MY2016/17 rice stocks to approximately 4.5 million metric tons, of which 1 million metric tons are government rice stocks. This is a 46 percent reduction from MY2015/16 due to the larger-than-expected sale of government stocks in June 2017. In June 2017, the government finalized the sale of 3.6 million metric tons of old-crop rice stocks which included (1) 0.5 million metric tons of deteriorated rice stocks mainly to power plants and fertilizer manufacturers from the 1.1 million metric ton April 28 tender, and (2) 1.66 million metric tons of food-quality rice from the 1.8 million metric ton May 24 tender. Additionally, by the end of June 2017, the government is expected to sell approximately 2.1 million metric tons of feed-quality rice stocks from the 2.2 million metric ton tender issued on June 15, 2017. For this tender, the government received 16 qualified bids totaling approximately 2.1 million metric tons including several bids from new feed/fertilizer businesses recently established by Thai rice millers and exporters. The received bids were between 4,000 – 5,000 baht per metric ton (118 – 148 USD/MT). Approximately half of the sale will be old-crop 5% grade white rice with the other half consisting of broken rice for fertilizer and feed, particularly for swine feed. Traders expect that a large portion of this feed-quality rice could be reprocessed for exports in 2017, particularly to African countries.

If the sale of 2.1 million metric tons of feed-quality rice stocks is finalized, the government will have sold 7.3 million metric tons of rice stocks since January 2017, including (1) 3.1 million metric tons of food-quality rice, (2) 3.7 million metric tons of feed/industrial quality rice, and (3) 0.5 million metric tons of deteriorated rice. These figures may include some amount of rice that is officially recorded, but unaccounted for. The government still holds 0.8 - 0.9 million metric tons of old-crop rice stocks accumulated during the MY2011/12 – MY2013/14 pledging programs which consists of 0.6 million metric tons of deteriorated rice, 0.2 million metric tons of food-quality rice, and 0.1 million metric tons of feed-quality rice.

The government plans to issue a new tender for the remaining 0.6 million metric tons of deteriorated rice stocks in early July 2017, followed by a tender for the 0.2 million metric tons of food-quality rice in August 2017. By September 2017, the government aims to deplete almost all of the rice stocks accumulated during the MY2011/12 – MY2013/14 pledging programs. However, the sale of government rice stocks during July – August 2017 will be challenging as supplies of second off-season rice will have entered the market.

1.4 Export Update

Preliminary rice exports during January 1 – June 13, 2017, totaled 5.4 million metric tons, up 18 percent from the same period last year due to the strong demand for white and parboiled rice from Middle Eastern and African countries. Export prices of 5% grade white rice increased to 440 USD/MT, a price point last recorded in September 2013. Traders will likely continue to export around 0.9 million metric tons a month during the second half of 2017 as rice exporters still have approximately 2-3 million metric tons of old-crop rice bought from the government stocks in June 2017. Export prices of this old-crop rice are 6-8 percent cheaper than Vietnamese rice. Also, the full recovery of MY2016/17 off-season rice production will help boost parboiled rice exports as the price difference between Thai and Indian parboiled rice has converged. Presently, the price difference between Thai and Indian parboiled rice is approximately 25 USD/MT, compared to 70 USD/MT during the same period last year.

Post’s forecast for MY2016/17 rice exports is revised up to 11 million metric tons. This is an 11 percent increase from MY2015/16. Meanwhile, MY2017/18 rice exports are expected to decline to 10 million metric tons, which is a 9 percent reduction from MY2016/17 as the government has depleted its food-quality rice stocks in MY2016/17.

2. Corn Update

Farm-gate prices of corn remain at around 6,000 – 6,500 baht per metric ton (192 USD/MT) which is far below the government target of 8,000 baht per metric ton (237 USD/MT). This is due to the sale of government feed-quality rice stocks which can be used as a substitute for domestic corn and imported feed wheat in poultry and swine feed rations. Currently, government rice stocks are relatively cheaper than domestic corn and import feed wheat. The government is expected to maintain the domestic purchase requirements for import permits of feed wheat in order to increase domestic corn prices.

Even though domestic corn prices still face downward pressure from the sale of government rice stocks, the government announced that it will continue to encourage farmers to shift from off-season rice production to corn production in MY2017/18. Despite the ineffectiveness in meeting the MY2016/17 policy target, the government has proposed to increase the corn planting target to 3.4 million rai (0.5 million hectares) in MY2017/18 by reducing MY2017/18 off-season rice production. In MY2016/17, around 140,000 rai of MY2016/17 off-season rice were reportedly shifted to corn, which was far below the target of 2.5 million rai (0.4 million hectares) due to unattractive corn prices. Unlike in MY2016/17, the government is considering giving a direct payment of 2,000 baht per rai (370 USD/hectare) (with a maximum of 15 rai (2.4 hectares) per household) to off-season rice farmers who are willing to shift to corn production in MY2017/18.

Post’s forecast for corn supply and demand remains unchanged from the previous forecast as the additional acreage of corn will be limited due to unattractive corn prices, unless the government provides direct payments to farmers.

3. Wheat Update

The Ministry of Commerce decided to allow feed mills that produce shrimp feed an 110,000 metric ton exemption to the domestic purchase requirements for feed wheat import permits. This request was made by the Thai Feed Mill Association in March 2017. Meanwhile, other animal feed production using imported feed wheat is still subject to the corn domestic absorption requirements.

Post’s forecast for total wheat imports remains unchanged at 3.6 million metric tons in MY2016/7 and 3 million metric tons in MY2017/18. 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 substitution of rice for feed wheat in poultry and swine feed rations.

Thailand’s Rice Production, Supply, and Demand

Rice, Milled2015/20162016/20172017/2018
Market Begin YearJan 2016Jan 2017Jan 2018
ThailandUSDANewUSDANewUSDANew
OfficialPostOfficialPostOfficialPost
Area Harvested9444944410083102471048010732
Beginning Stocks11270112708403838762534487
Milled Production158001580018600192001950020430
Rough Production239392393928182290912954530955
Milling Rate (.9999)660066006600660066006600
MY Imports300300250200250200
TY Imports300300250200250200
TY Imp. from U.S.000000
Total Supply273702737027253277872600325117
MY Exports9867988310000110001000010000
TY Exports9867988310000110001000010000
Consumption and Residual9100910011000123001150011470
Ending Stocks840383876253448745033647
Total Distribution273702737027253277872600325117
Yield (Rough)2.5348
2.5348
2.7952.8392.8192
2.8844


Thailand’s Corn Production, Supply, and Demand


Corn

2015/2016

2016/2017

2017/2018

Market Begin

Thailand

Jul 2015

Jul 2016

Jul 2017

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Harvested

1090

1090

1168

1168

1100

1100

Beginning

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

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

FSI Consumption

100

100

100

100

100

100

Total Consumption

4900

4900

5300

5100

5450

5400

Ending Stocks

172

172

172

172

122

272

Total Distribution

5439

5439

5972

5972

5772

5772

Yield

4.31194.31194.45214.45214.45454.4545

Thailand’s Wheat Production, Supply, and Demand

Wheat

2015/2016

2016/2017

2017/2018

Market Begin

Jul 2015

Jul 2016

Jul 2017

Thailand

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

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 Cons.

4500

4436

3600

3720

2800

2800

Ending Stocks

1002

885

752

545

752

525

Total Distribution

5737

5556

4602

4485

3752

3545

Yield

0

0

0

0

0

0