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3 Oct 2012

Agriculture

Thai Rice Exports Facing Intense Global Competition in 4Q12 (Business Brief No.3359 Full ed.)

In 2012, Thai rice exports have been facing a huge challenge amid heightened global competition as India resumed exports of white and parboiled rice after a three-year suspension. This has forced Vietnam, a major rice-exporting rival, to slash their rice prices to compete with India. Because Thai rice export prices are much higher than those of India and Vietnam, many importing countries have switched to rice from them instead, resulting in a substantial decline in Thai rice exports versus the record high in 2011. Therefore, attempts to promote our rice exports this year and next year will be a great challenge for relevant Thai agencies.
We at KResearch project that Thai rice exports in 2012 may reach perhaps 7.0-7.5 million tons, including rice sold via G2G deals we have entered into with other nations. However, that could grow if the government can deliver on other purchase agreements, too.
With regard to rice prices, we expect that Thai rice export prices to the yearend will remain around USD550-600/ton in line with lofty paddy prices paid by the government as part of their rice pledging program to assists small farmers. Given this, we expect that the value of Thai rice exports in 2012 may total perhaps USD3.5-4.5 billion.

As for 2013 outlook, it is expected that global rice prices will likely be dampened by increases in rice production and stocks by major exporting nations, assuming that there are no ravages by unexpected weather conditions. If the price spread between our rice and rivals remains unchanged next year, it will put more pressure on our rice exports. However, that would also depend on G2G deals that could help offset any export shortfall.

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