Asian country is one of the world’s biggest producers and exporters of rice.
Thailand is one of the world’s most important producers and exporters of rice, and rice is important in the diet of the average person in Thailand as well as to the country’s economy. The country imports all its wheat needs.

According to the International Grains Council (IGC), Thailand will produce 5 million tonnes of grains in 2017-18, down from 5.3 million the previous year. The total includes 4.9 million tonnes of maize, down from 5.2 million the previous year. The IGC also forecasts that Thailand will produce an unchanged 100,000 tonnes of sorghum.

The IGC forecasts that Thailand will import 4 million tonnes of grains in 2017-2018, a figure unchanged from the previous year. Imports of wheat are put at 3.4 million tonnes in 2017-18, down from 3.6 million the previous year.

In rice, Thailand is one of the world’s most important producers and exporters. The IGC forecasts its output in 2017-18 at 19.3 million tonnes, up from 18.5 million the year before. Its projected exports are an unchanged 10.3 million tonnes.

The attaché’s annual report explained that the recovery in rice production is expected because “reservoirs are well above critically low levels that hindered 2016-17 rice production.”

“The government is likely to sell all of the remaining 2.9 million tonnes of food-quality rice stocks in 2017, which will help maintain Thai rice export volumes,” the report said. “The sale of non-food quality government rice stocks is anticipated to increase the use of broken rice by the feed and ethanol industries in 2017 and 2018. Government stocks are expected to decline to 1 million to 2 million tonnes by the end of market year 2017-18.”

In Thailand, water supplies for both irrigated and non-irrigated growing areas show a considerable improvement on a year earlier, enabling 2017-18 main crop seeding to advance quickly, the IGC said.

“Together with the relatively small secondary (off-season) outturn, planting of which typically commences in November, the area for harvesting is seen expanding by 4% y/y and, on the basis of trend productivity, output is projected to stage a further recovery, to 19.3 million tonnes (18.5 million last year).”

The government sell-off of reserves would bring down stocks.

“In Thailand, where the government continues to dispose of old crop reserves, inventories are projected at a 10-year low,” the IGC said. “Due to ongoing sales of states reserves, Thailand’s end-season stocks are predicted to fall to a six-year low of 6 million tonnes (8.1 million last year). On the supply side, the Thai government sold almost 1.7 million tonnes of old crop reserves in its latest auction, although supplies are yet to be released to exporters.”

Thailand’s rice exports between January 2017 and April 2017 totaled 3.6 million tonnes, according to the IGC, a figure that is up slightly on the year and the highest since 2011.

“Data show that deliveries to sub-Saharan Africa expanded by one-fifth, to a nine-year peak of 1.8 million tonnes, including substantially larger dispatches to Angola, Benin (mainly for transshipment to Nigeria), Senegal and South Africa,” the IGC said, as part of an analysis of that part of Africa’s rice imports. “While the region’s buyers have imported more parboiled supplies, rising by 30%, to 640,000 tonnes, the overall increase was also underpinned by larger purchases of white and broken rice.

“World market availabilities were boosted by the Thai government’s stock releases and, with offer prices likely pegged at big discounts to open market values, sizeable amounts of low-quality rice have been shipped to Africa.”

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Most wheat imported

Thailand produces little wheat.

“Wheat production is marginal in Thailand due to unfavorable climatic conditions, the lack of seed development, and unattractive returns compared to other field crops,” the attaché said. “Total production is estimated at approximately 300 to 400 tonnes on a cultivated area of around 1,000 rai (160 hectares). Cultivation is mainly in the upper northern regions of the country as a minor crop after the main-crop rice harvest, particularly in the provinces of Maehongson and Nan.”

The attaché forecast a reduction of 25% in wheat consumption in 2017-18 to approximately 2.8 million tonnes in the annual report on the sector, updating the figure in June to 3 million.

“Demand for feed wheat as a substitute for domestic corn and broken rice in poultry and swine feed rations should significantly decline as the government’s import restrictions on feed wheat are expected to remain in place,” the report said. “Additionally, demand for feed wheat by shrimp farmers is expected to remain below historic averages due to lower production following the outbreak of Early Mortality Syndrome (EMS).”

Meanwhile, milling wheat consumption is likely to continue to trend upwards, the report said, forecasting a 4% to 5% increase in demand, driven by the baking and food processing industries.

“Demand for milling wheat for bakery and instant noodle production account for 60% to 70% of total milling wheat consumption,” the report said. “The Ministry of Commerce decided to allow feed mills that produce shrimp feed an 110,000-tonne 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.”

In its annual report, flour miller T S Flour Mill Public Company Limited explains the industry’s dependence on imported wheat, particularly from the United States, Australia and Ukraine. The industry is concentrated and difficult for new entrances.

“Nonetheless, there are 11 wheat (milling) industries in Thailand,” T S Flour Mill said. “Each industry has production capacity around 250-1,500 tonnes per day.”

The IGC puts Thailand’s imports of wheat flour at 200,000 tonnes in 2017-18, a figure that is unchanged from the previous year. T S Flour Mill said that the main origins were Vietnam, Turkey, Philippines, Japan and Sri Lanka.

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corn harvest

Domestic corn prices sagging

The government’s sales of rice from stock have had an adverse effect on corn production, making it less attractive to farmers.

“Farm-gate prices of corn remain at around 6,000-6,500 baht per tonne ($192 per tonne), which is far below the government target of 8,000 baht per tonne ($237 per tonne),” the attaché said at the end of June. “This is due to the sale of government feed-quality rice stocks that 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 report said.

“The government is expected to maintain the domestic purchase requirements for import permits of feed wheat in order to increase domestic corn prices,” the attaché said.

The attaché had explained earlier in the year how the restrictions work.

“To secure a feed wheat import permit, the importer must demonstrate a 3 to 1 domestic corn absorption rate (e.g. to import a tonne of feed wheat a mill must use 3 tonnes of domestic corn),” the annual report said. “The government also set a minimum purchase price for domestic corn at 8 baht/kg ($227 per tonne) for feed mills. Eligible feed wheat importers must be feed mills owners and will be required to buy domestic corn prior to being allowed to import feed wheat. Additionally, feed mill owners are prohibited from reselling the imported feed wheat. Finally, feed wheat shipments will also be checked for aflatoxin and radiation contamination under the Feed Quality Act 2558 (2015).”

Meanwhile, the applied tariff on wheat flour is 5% of 0.5 baht/kg, except for the ASEAN Free Trade Agreement (Brunei, Indonesia, Malaysia, Philippines, and Singapore) and the ASEAN-Australia-New Zealand Free Trade Agreement where wheat flour has been duty free since January 2010 as long as 40% of the content originates from the exporting country, the attaché said. Wheat flour imports from Vietnam have been duty free since the end of 2015 under the ASEAN Economic Community.

“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 2017-18,” the recent attaché report said.

According to the IGC, Thailand will import 2.9 million tonnes of soybeans in 2017-18, up from 2.8 million the year before.

“Growing feed demand driven by expanding livestock and poultry sectors is expected to generate increased import demand for soybeans in 2017-18 and soybean meal in 2016-17 and 2017-18,” the attaché said in an annual report on the oilseeds sector. “While many soybean oil crushing plants are profitable, most palm oil crushing plants are struggling due to high supply costs and low capacity utilization causing many of them to operate at a loss. This growth comes from favorable prospects for exports of chicken meat and pork meat as well as increased domestic meat consumption.”