Despite floods, rice output forecasts unchanged

Despite floods, rice output forecasts unchanged

Strong baht bigger obstacle for exporters

Farmers in Nakhon Sawan's Chum Saeng district have tried to harvest as much as possible of their rice in early August. (Bangkok Post file photo)
Farmers in Nakhon Sawan's Chum Saeng district have tried to harvest as much as possible of their rice in early August. (Bangkok Post file photo)

Around 1 million rai of rice plantation in the Northeast was destroyed by the recent flood, but it is unlikely to have any severe effect on Thai rice production and export, with shippers and industry officials keeping rice export forecasts unchanged at 10 million tonnes.

Flooding is expected to support Thai rice prices continuing to rise as global demand remains strong.

The Agriculture Ministry said that although rice plantation was hit by the flood, the annual production forecast remained unchanged at 28-30 million tonnes of paddy, or around 18 million tonnes of milled rice. This amount is sufficient for domestic consumption and abundant exports, the agency said.

Tropical depression Sonca has lashed the province of Sakon Nakhon over the past few weeks, bringing the worst floods that region has seen for two decades and briefly halting operations at Sakon Nakhon airport, inundating the city as well as agricultural areas.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said the flood would cause a slightly delay in the harvesting period of the major crop, which normally starts in late October, but it was unlikely to have any major impact on production, price or export outlook.

"The flooding would affect the production of glutinous rice, grown mostly in northeastern areas, but it would not hurt rice exports," Mr Chookiat said. Glutinous rice makes up 10-20% of total Thai rice production.

He said the major negative factor hurting rice exports was the strengthening baht, making Thai rice prices uncompetitive in the eyes of some buyers paying with US dollars.

But Mr Chookiat and the Thai Rice Exporters Association are keeping the Thai rice export forecast unchanged at 10 million tonnes in 2017.

In addition to the stronger baht, the slight dip in supply caused by flooding in the Northeast at a time when global demand remains strong is expected to keep Thai rice prices rising, said an industry official.

The psychological effect of the recent flood has pushed the paddy price up by 5% to 7,600 baht per tonne, up from 7,200 baht previously. That has pushed the offer price of Thai common grade white rice to $390 a tonne, free on board, higher than the $340 a tonne offered by other major exporting countries such as India, Vietnam and Pakistan.

Wichai Phochanakij, deputy permanent secretary in the Commerce Ministry, said he expected the price of glutinous rice to be slightly higher because of falling supply caused by the recent flood, and that would help reduce pressure on prices during the harvesting period, when prices are typically weighed down by increasing supply.

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