Thai rice exports set to plunge

January 17, 2012
By Gwen Robinson
Financial Times

Thailand’s rice exporters have warned that rice exports may plunge as much as 38 per cent this year, the lowest level in more than a decade, due to India’s re-entry into the rice exporting market and a new Thai government subsidy scheme that is inflating prices.

The projected fall in export volumes would see Vietnam replace Thailand, which accounts for 7 per cent of global rice production and more than 30 per cent of the global rice market, as the world’s biggest rice exporter.

The Thai rice industry expects an abundant rice harvest in 2012, close to the 30m-32m tonnes of paddy harvested in 2011. Yet, Thai rice exports are likely to fall to between 6.5m and 8m tonnes from last year’s 10.5m tonnes, according to the Thai Rice Exporters Association (TREA). Key rice-growing regions of Thailand emerged relatively unscathed from massive flooding in the country’s central and northern regions last year, and are likely to benefit from the effect flooding has on soil fertility, said local exporters.

Floods Ruining 14% of Thai Rice May Erase Global Export Glut: Commodities

The main Thai harvest, which represents about 70 percent of annual output, was expected to expand 3.3 percent to a record 25.1 million tons before the floods, government estimates show. Photographer: Nicolas Asfouri/AFP/Getty Images

Oct 25, 2011
By Luzi Ann Javier and Supunnabul Suwannakij
Bloomberg

Thailand’s worst floods in more than a half century may have wiped out as much as 14 percent of paddy fields in the world’s biggest rice exporter, potentially erasing the predicted global glut.

The Thai export price, a global benchmark, may climb 20 percent to $750 a ton by December, said Sumeth Laomoraphorn, the president of C.P. Intertrade Co., the country’s largest seller of packaged rice. Tropical storms inundated 62 of 77 provinces, destroying 1.4 million hectares (3.5 million acres) and as much as 7 million metric tons of crops, the government says. That equals 4.6 million tons of milled grain, 1 million more than the surplus anticipated by the U.S. Department of Agriculture.

Rice, a staple for half the world, was already this year’s best-performing agricultural commodity after drought cut the U.S. harvest to the lowest level in 13 years. Prices also rose as Thailand started buying at above-market costs to boost farmer incomes. That is adding renewed pressure to global food prices monitored by the United Nations, which had dropped 5 percent from a record in February as other grains declined.

[Thai] Rice exporters feel threatened: Cheaper neighbours' supplies may be tapped

28/07/2011
Phusadee Arunmas
Bangkok Post

Thai rice exporters are already looking for alternative supplies from Vietnam and Cambodia in case the new government makes the price too dear for export, which could halve volume to only 5 million tonnes next year for a revenue loss of 60-70 billion baht.

The Thai Rice Exporters Association (TREA) has been crying foul for a while now regarding Pheu Thai's announced policy to allow farmers to mortgage their entire harvest at 15,000 baht a tonne for white rice and 20,000 baht for fragrant or Hom Mali rice.

Even though the party has said purchases would not start until November, rice prices have been rising each week since before the July 3 general election (see table).

[Thai] Govt may opt for foreign [Cambodian] paddy rice to boost [Thai] exports

August 30, 2010
By PETCHANET PRATRUANGKRAI
THE NATION

The government is considering opening the local market to paddy rice from neighbouring countries under the Asean free-trade accord, though the move was strongly resisted earlier out of concern about circumventing the domestic subsidy programme.

Now Thai rice exports face tough competition after Vietnam started allowing paddy rice imports from Cambodia early this year to increase its export capability.

Despite being bound to Afta, Thailand has not allowed all rice types to be brought into the country. Only broken rice can access the domestic market, and must go directly to the food industry.

Thailand wants to open up the market to all types of rice rather than discriminate, as it hopes to strengthen its export competitiveness in the future.

Yanyong Phuangrach, permanent-secretary to the Commerce Ministry, said last week that Thailand will face a flood of rice and grains after the market is liberalised.

According to the Thai Rice Exporters Association, the country's exports dropped by 9.18 per cent to 5.06 million tonnes as of August 20. Vietnam's rice exports reached 4.6 million tonnes in the first half.

Under Afta, import duties on rice were cut to zero early this year among Asean countries, with the exception of Indonesia, Malaysia and the Philippines. However, Thailand has not allowed paddy rice imports out of fear that it would be used in the pledging project of the government instead of locally produced rice.

Now that the guarantee scheme, which requires every farmer to register for the scheme, has replaced the pledging scheme, the country should not be afraid of the circumvention practice any longer, he said.

The ministry will soon submit the agreement for the National Rice Policy Committee's approval after the Board of Trade of Thailand and the Thai Chamber of Commerce understand the need for rice trade liberalisation.

To ensure that local farmers are not affected by falling prices after paddy rice imports are allowed, the ministry will issue a clear time frame and conditions for allowing paddy imports. Initially, paddy rice will be imported for export only. After rice millers polish the rice, they must transfer it to exporters within a limited period. The government will not allow imports of paddy rice during the harvest season.

The government will also impose additional standards to protect the quality of Thai rice and its prices.

An industry source said Thai rice exports should increase when neighbouring countries send over more rice. Vietnam's exports surged in the first half of the year, as almost 1 million of its 4 million total exports came from Cambodia, the source said.

Prasith Boonchuey, president of the Thai Rice Farmers Association, said farmers support allowing paddy rice imports since Vietnam has taken up price-cutting to compete with Thai rice in international trade.

"Due to lower production costs in Cambodia, Vietnam can dump its fragrant paddy rice at Bt11,000-Bt12,000 a tonne, while Thai Hom Mali is quoted at Bt15,300 a tonne," he said. Clear quality-control measures are needed to ensure that Thai rice is not mixed with inferior rice, he added.

Rice sales crippled

BangkokPost.com, dpa

Exporters unable to buy rice because of widespread hoarding and speculation have begun defaulting on orders from around the world worth up to $5 billion.

The president of the Thai Rice Exporters Association, Chookiat Ophaswongse said on Friday, "There will be a lot of defaults coming up, because we cannot find any rice in the market.

"What's happening now is a lot of traders have started to negotiate with buyers abroad on how to compensate them because we cannot buy any rice."

The rice trade has been hard hit this year by unprecedented price volatility in the market, sparked by India's decision to halt rice exports. Vietnam and Cambodia also have ordered a halt to foreign sales.

India traditionally exports about 4 million tons of rice a year.

"And this year they just stopped, so that 4 million tons out of a market of say 29 million tons was removed," said Chookiat.

Vietnam, the world's second largest rice exporter after Thailand, has also put a cap on its exports at about 3.5 million tons this year, 1 million tons less than expected, and Egypt has stopped all exports, taking another 1 million tons off the world market.

"So now everyone is turning to Thailand, and this is a problem," Chookiat told the news agency Deutsche Presse-Agentur dpa.

Rice exporters, who usually sell forward at a fixed price and then buy on the local market to meet orders, have suffered unprecedented losses this year in the face of dramatic price increases, sometimes jumping $20 a day per ton.

The price of 100 per cent Grade B white rice, for instance, has jumped from $420 per ton in early January to $720 now, almost doubling.

"By my estimates, the rice traders have lost around 4 to 5 billion baht ($127 million to $159 million), at least," said the rice trader.

Chookiat criticised Thai Commerce Minister Mingkwan Sangsuwan for encouraging Thai farmers to hoard their rice in order to fetch better prices for it. Not only farmers, but millers and local businessmen have started hording and speculating on Thai rice, creating an artificial shortage for exports.

The government currently has a 2.1-million-ton stockpile that it has promised to distribute to the poor to alleviate high rice prices.

The stock is expected to last about three months, after which the government will need to go to the market to replenish their stocks, predicted Chookiat.

The crunch for the export market will also come in three to four months, when Indonesia and Iran are likely to seek imports of 1.5 million tons and 1 million tons, respectively, to meet local demand, Chookiat forecast.

Thailand has been the world's leading rice exporter since the mid-1960s. Last year, Thailand's rice exports hit an historic high of 9.55 million tons, earning the country $3.6 billion.

This year's rice exports are estimated to reach 8.75 million tons, if exporters aren't forced to default on orders, earning as much as $4.7 billion.