Rice packers warn of higher prices as production drops

Rice packers warn of higher prices as production drops

Consumers should brace for pricier packed rice, notably for the hom mali fragrant variety, through the end of 2018 because of low supply and higher export demand.

Somkiat Makcayathorn, honorary president of the Thai Rice Packers Association, warned yesterday that hom mali rice production is forecast to drop drastically because of heavy rain, as hom mali paddy prices have surged to 17,000-18,000 baht a tonne now from 12,000 baht a year ago.

As a consequence, hom mali packed rice prices are up 15-20% from year-earlier levels.

"Packed hom mali rice prices are now in an uptrend, not only because of depleted state stocks but also low supply," Mr Somkiat said. "We expect packed premium rice prices to stay relatively high until the new harvest in November."

Normally, hom mali rice production averages 10 million tonnes a year, but supply from the 2017-18 main crop is expected to fall by 20% from the previous season.

Moreover, Thailand ramped up hom mali rice exports last year, with outbound shipment rising 10% to 2.3 million tonnes, driving domestic rice prices to climb accordingly.

According to Mr Somkiat, the higher prices for packed hom mali rice also stem from rising production costs.

Raw materials for milled rice are up 35% year-on-year.

Hom mali rice sells for 180-250 baht per 5kg package at the moment, up from 150-200 baht last year.

"Hom mali rice prices for a 5kg package have risen by 20-30 baht since April," Mr Somkiat said. "If raw material costs are higher than 40 baht per kg, producers must increase the packed rice prices."

Free-on-board prices for hom mali rice (2016-17) were yesterday quoted at US$1,191 a tonne, up from $1,177 a tonne on Wednesday last week, prices for the 2017-18 season rising to $1,223 a tonne from $1,193 a week ago.

The steeper prices are driven by higher demand, Mr Somkiat said, adding that Thai restaurants have become popular abroad and more people in Asia, China, the US and Europe are consuming hom mali rice.

In the 2018-19 season, Thailand is forecast to produce a total of 38 million tonnes of paddy and 21-22 tonnes of milled rice, similar to the previous year's production.

Commerce Minister Sontirat Sontijirawong said yesterday that hom mali paddy prices are expected to stay relatively high throughout 2018 at more than 15,000 baht a tonne, up from 11,790 baht a year ago, with prices for white rice paddy averaging more than 8,000 baht a tonne, up from 7,653 baht.

The Commerce Ministry recently raised its rice export target to 10 million tonnes at the end of this year from 9.5 million in earlier projections, due to higher demand and lower global supply.

Last year, Thailand exported a record 11.6 million tonnes of milled rice, up 17.4% year-on-year, fetching 174.5 billion baht, up 12.8%.

The top five importers of Thai rice were Benin, China, South Africa, Cameroon and the US.

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