Highlights

MY2016/17 rice and corn production is well underway due to favorable precipitation. MY2016/17 rice consumption and exports are revised down due to the suspension of several sales of government rice stocks. MY2016/17 feed wheat imports are higher than expected, but are still expected to decline significantly from last year due to import restrictions.

Executive Summary

MY2017/18 rice and corn production remains unchanged from the previous forecast due to favorable precipitation. Severe flooding damage is unlikely in 2017 as reservoirs still have excess capacity to manage incoming water supplies from additional tropical storms during the 2017 monsoon season.

The sale of government rice stocks is lower than expected in MY2016/17 as the sale of feed-quality and deteriorated rice has been suspended since June 30, 2017, by the order of the Administrative Court. This sales suspension will likely limit rice utilization by feed and non-food manufacturers as the price of rice from the government stocks is 40-50 percent cheaper than the market price of new-crop broken rice. Additionally, rice export growth is expected to slowdown in the second half of 2017 as the majority of government food-quality rice stocks have already entered the market in the first half of 2017. MY2016/17 wheat imports have been revised up due to higher than expected feed wheat imports, partly driven by a limited exemption on the domestic corn purchase requirements for shrimp feed manufacturers. However, total wheat imports still declined by 19 percent in MY2016/17 due to a significant reduction in feed wheat imports following the implementation of the new Thai import regulations on feed wheat.

Rice

Production

MY2017/18 main-crop rice cultivation is well underway nationwide due to favorable precipitation. Most main-crop rice planting acreage in the northern and northeastern regions (mainly non-irrigated areas) is in the vegetative stage. The Thai Meteorological Department reported that cumulative precipitation during January 1 – July 23, 2017, in these regions is approximately 30 percent above both the normal rainfall average and last year’s rainfall levels. The Ministry of Agriculture and Cooperatives reported that approximately 1 million rai (0.2 million hectares) of MY2017/18 main-crop rice were affected by flooding. However, farmers in the affected areas, particularly in the lower northern region, have reportedly already replanted as the flood waters receded quickly. Additionally, the Royal Irrigation Department (RID) are managing reservoirs levels to minimize possible flood damage from this year’s monsoon rain. The RID reported that, as of July 26, 2017, water supplies in major reservoirs totaled 5.7 billion cubic meters which is more than double last year’s water levels. However, these reservoirs still have excess capacity to manage incoming water supplies from additional tropical storms during the 2017 monsoon season. This is opposite of the case in 2011 when reservoirs had reached their maximum capacity in July causing severe flooding from the monsoon storms.

Post’s forecast for rice production in MY2017/18 remains unchanged at 20.4 million metric tons which is approximately a 6 percent increase from MY2016/17 due to favorable weather conditions and sufficient irrigation supplies.

Consumption

MY2016/17 and MY2017/18 rice consumption is revised down to around 11 million metric tons due to the suspension of the sale of 2.6 million metric tons of government feed and non-food quality rice stocks. Traders expect that the bureaucratic challenges in ending this sales suspension means that these rice stocks are unlikely to be sold until 2019. Consequently, additional rice utilization by poultry feed producers, power plants, and fertilizer manufacturers will not be economically viable as the price of feed-quality and deteriorated rice from government stocks is 40-50 percent cheaper than the market price of new-crop broken rice. Consequently, the feed industry’s demand for broken rice is revised down to approximately 1.8 million metric tons in MY2016/17, compared to the previous forecast of 2.4 million metric tons. Meanwhile, the utilization of broken rice for fertilizer production is revised down to 0.2 million metric tons. No broken rice is expected to be used by power plants in MY2016/17 and MY2017/18.

Exports

Preliminary rice exports during the first half of 2017 totaled 5.4 million metric tons. This is an 8 percent increase from the same period last year as Thai white and parboiled rice are more competitive in the Middle Eastern and African markets, driven by the sale of government rice stocks and the recovery of MY2016/17 off-season rice production. Exports of white rice totaled 2.7 million metric tons in the first half of 2017. This is a 2 percent increase from the same period last year, reversing the first five months’ 5 percent decline. Parboiled rice exports in the first half of 2017 increased 25 percent from the same period last year, totaling 1.2 million metric tons. However, Thai rice exports in the second half of 2017 are expected to grow at a slower pace, particularly for white rice, due to the suspension of the sale of government stocks in the June 2017. As a result, total Thai rice exports in 2017 are expected to reach 10.5 million metric tons, compared to the previous forecast of 11 million metric tons.

Stocks

MY2016/17 and MY2017/18 rice stocks are revised up to approximately 6 million metric tons, of which approximately 3.3 million metric tons are government stocks. The government stocks are forecast to consist of 2.2 million metric tons of feed-quality rice and 1.1 million metric tons of deteriorated rice . The sale of these rice stocks has been suspended since June 30, 2017, by the order of the Administrative Court in response to a petition by an allegedly disqualified bidder who participated in (1) the April 28, 2017 tender for 1.1 million metric tons of deteriorated rice and (2) the June 15, 2017 tender for 2.2 million metric tons of feed-quality rice. As the court process will take some time, the government is expected to be unable to sell these stocks this year.

If the sale of the July 18, 2017 tender for food quality rice of 0.2 million metric tons is finalized, the government sale of rice stocks will total 4.9 million metric tons during January - July 2017. The sale will consist of 3.3 million metric tons of food-quality rice and 1.6 million metric tons of feed and industrial quality rice

Corn Update

Post’s forecast for MY2017/18 corn production remains unchanged at 4.9 million metric tons. This is a 6 percent reduction from last year due to the government’s seizure of corn planted in illegally deforested areas and unattractive corn prices. Corn plantings in illegally deforested areas are gradually declining due to stringent law enforcement by local officials, particularly in the northern region which accounts for approximately 70 percent of total corn production. Also, some farmers have shifted to alternative crops such as vegetables due to unattractive corn prices. In July 2017, farm-gate prices for corn further declined to 5-6 baht per kilogram (150-180 USD/MT) which is 28 percent below last year’s price of about 8 baht per kilogram (243 USD/MT). This is partly due to competition from relatively cheaper duty-free corn imported from neighboring countries under the ASEAN Free Trade Agreement (AFTA). Despite the low farm-gate price, on July 11, 2017, the cabinet approved measure to increase target corn acreage. To achieve this target, the cabinet agreed to provide a direct payment of 2,000 baht per rai (375 USD/hectare) (with a maximum of 15 rai per household) during MY2017/18 – MY2019/20. This is part of the government’s plan to diversify 0.7 million rai (0.1 million hectares) of MY2017/18 off-season rice into alternative crops. The total budget for this program is 1.3 billion baht (39 million USD). However, sources expect that the government is unlikely to achieve this target due to attractive rice prices and sufficient water supplies for rice cultivation.

Wheat Update

MY2016/17 wheat imports have been revised up to around 3.8 million metric tons due to higher than expected feed wheat imports following the implementation of the domestic corn purchase requirements for imported feed wheat Part of this upward revision is due to shrimp feed manufacturers who have used imported feed wheat in their feed rations following the Ministry of Commerce’s June 2017 decision to allowed 110,000 metric tons of feed wheat to be exempt from the domestic corn purchase requirements for shrimp feed manufacturers. However, total feed wheat imports in MY2016/17 are expected to decline to approximately 2.5 million metric tons, down 27 percent from MY2015/16 due to the government’s import restrictions on feed wheat. The reduction in feed wheat imports is expected to outweigh the slight increase in milling wheat imports. As a result, MY2016/17 total wheat imports are expected to decline 19 percent from MY2015/16 and will likely further decline by 20 percent in MY2017/18 as the government is expected to maintain the domestic corn purchase requirements as current domestic corn prices are still below their target of 8 baht per kilogram (243 USD/MT).

Rice, Milled

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

10247

10427

10700

10732

Beginning Stocks

11270

11270

8403

8387

5853

6287

Milled Production

15800

15800

19200

19200

20400

20430

Rough Production

23939

23939

29091

29091

30909

30955

Milling Rate (.9999)

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

27853

27787

26503

26917

MY Exports

9867

9883

10000

10500

10000

10000

TY Exports

9867

9883

10000

10500

10000

10000

Consumption and Residual

9100

9100

12000

11000

11500

10780

Ending Stocks

8403

8387

5853

6287

5003

6137

Total Distribution

27370

27370

27853

27787

26503

26917

Yield (Rough)

2.5348

2.5348

2.839

2.79

2.8887

2.8844

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

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 Residual

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

4.3119

4.3119

4.4521

4.4521

4.4545

4.4545

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

947

885

607

625

Production

0

0

0

0

0

0

MY Imports

4817

4691

3600

3800

3000

3000

TY Imports

4817

4691

3600

3800

3000

3000

TY Imp. From US

679

632

0

670

0

690

Total Supply

5682

5556

4547

4685

3607

3625

MY Exports

235

235

240

240

200

240

TY Exports

235

235

240

240

200

240

Feed and Residual

3300

3276

2500

2600

1500

1500

FSI Consumprtion

1200

1160

1200

1220

1200

1300

Total Consumption

4500

4436

3700

3820

2700

2800

Ending Stocks

947

885

607

625

707

585

Total Distribution

5682

5556

4547

4685

3607

3625

Yield

0
0
0
0
0
0