Rice shipments from Thailand, the largest supplier after India, are likely to decline about 4% this year amid increased competition from Vietnam and other producers.
Exports will total 9.5 million tonnes in 2017, Chookiat Ophaswongse, the honorary president of the Thai Rice Exporters Association, said Wednesday in an interview.
That compares with 9.88 million tonnes in 2016, according to data from the Ministry of Commerce.
Competition from Vietnam may cut white rice exports by about 400,000 tonnes to 4.6 million tonnes even as sales of premium jasmine grade rise climb about 9% to 2.5 million tonnes, Mr Chookiat said.
The forecast drop in exports comes as the US Department of Agriculture expects global rice consumption to lag behind production for the 12th straight year, limiting any price upside.
Prices of Thai white rice, a regional benchmark, have changed little over the past year and were at $375 a tonne on Jan 25. Vietnamese white rice is quoted at $434 a tonne and Indian rice at $370, according to data from the association’s website.
"Thai prices may hover around current levels as increasing demand is offset by ample supply from key suppliers," said Kiattisak Kanlayasirivat, a Bangkok-based director at Ascend Commodities SA. The upcoming harvest in Vietnam may cause prices to drop by $5 to $10 a tonne in the near term, he said.
Prices may also be pressured in the short term by the Thai government’s plan to sell its entire 8-million-tonne stockpile of food- and animal feed-grade rice this year.
It will announce details on the timing of the sale 2.8 million tonnes of food-grade rice on Friday. The effect of the sales will depend on their timing, Mr Chookiat said.
If buyers of state reserves have to take delivery in the next few months, the sales could have a short-term negative impact on prices as it would coincide with the start of the minor crop harvest, Mr Chookiat said. "In the longer term, it will lift negative pressure from the market and help boost global prices," he said.
As much as 3 million tonnes of exports this year are likely to be old varieties from state reserves, according to Mr Chookiat. Of the total state stockpile, 3 million tonnes are food-grade and the balance is for animal feed and ethanol producers, according to government data.
World rice production will increase 1.6% to 480 million tonnes and consumption will rise 1.5% to 477.8 million tonnes, according to the USDA. Output from India, Thailand and Vietnam, the world’s top exporters, will increase this season, data show.