Strong baht may dampen rice exports

Strong baht may dampen rice exports

A man arranges sacks of rice for exports at a warehouse in Ayutthaya province.TAWATCHAI KEMGUMNERD
A man arranges sacks of rice for exports at a warehouse in Ayutthaya province.TAWATCHAI KEMGUMNERD

Thailand is set to export 9.5 million tonnes of milled rice next year, says the Thai Rice Exporters Association.

That is down slightly from the 11 million tonnes Thailand is forecast to ship for the whole of this year, as the stronger baht is expected to curb exports, said president Charoen Laothammatas.

Thailand has exported 10.3 million tonnes of rice so far this year, up 16.3% from the same period of last year, according to Commerce Ministry data.

Mr Charoen said strong demand during the year-end holiday season should help Thailand export more rice in December and could push total 2017 rice exports to 11 million tonnes.

But that figure will not be enough for Thailand to reclaim its title as the world's biggest rice exporter, as India is expected to ship more than 11 million tonnes, he said.

Thailand, which was the No.1 rice exporter for more than three decades, lost the crown for the first time in 2012, when exports fell to 6.9 million tonnes from 10.6 million in 2011.

The sharp fall in 2012 was largely because of the Yingluck Shinawatra government's rice pledging scheme, which offered to buy rice from farmers at 50% above market prices. That made Thai rice exports uncompetitive, with massive amounts being kept in the state stockpiles, weighing on prices for years to come.

Mr Charoen said the Commerce Ministry's Foreign Trade Department has gradually released the record-high 18 million tonnes in rice stocks since mid-2017, leaving only 1 million tonnes of inedible-grade rice to be sold as animal feedstuff and other related purposes next year.

He said a major factor that was expected to cut Thai rice exports to 9.5 million tonnes next year is the stronger baht, which could make Thai rice prices less competitive.

"We are very concerned about the stronger baht, which keeps rising quite fast," said Mr Charoen.

He said the baht has risen more than 9% to a 31-month high of 32.50 baht per US dollar.

That level is well above the Vietnamese dong, which has risen 2%, allowing Vietnam, a major rice-exporting competitor, to offer lower prices.

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