Thai rice prices forecast to rise 5% in Q2

Thai rice prices forecast to rise 5% in Q2

Thai rice prices are expected to increase by 5% in the second quarter, pushed up by the war in Ukraine's effect on surging global commodity prices, says veteran trader Chookiat Ophaswongse.

Mr Chookiat, an honorary president of the Thai Rice Exporters Association, said there was growing concern about a wheat shortage as Russia and Ukraine are the main producers of the crop, while rising oil prices are likely to drive up overall commodity prices.

"Thai rice is expected to see just a 5% increase in prices in the second quarter because there are relatively high rice stocks in India, while rice production is expected to increase this year both in Vietnam and Thailand," said Mr Chookiat.

The 5% white rice price in the domestic market is now quoted at 12 baht per kilogramme, down from 16 baht per kg in the same period last year.

The free-on-board price of 5% Thai white rice is quoted at US$400 a tonne, higher than Indian white rice, which stands at $355 a tonne, and Vietnam's similar grains at $390 per tonne.

For the 2021/2022 harvest season, the association expects Thailand's rice production to increase to 30-32 million tonnes of paddy rice, or 20 million of milled rice, up from 27-28 million tonnes of paddy rice, or 17 million tonnes of milled rice, in the 2020/2021 season.

Widespread drought is unlikely this year, said the association, as happened two years ago. Given the ample water supply, second-crop rice production is also expected to increase.

He said the war is unlikely to affect Thailand's overall rice exports because shipments to Russia and Ukraine stood at only 6,000 tonnes and 3,000 tonnes, respectively, last year.

"It is fortunate export markets in the Middle East, such as Iraq, Iran and Saudi Arabia, will be back this year," Mr Chookiat said. "These countries are net rice importers with a combined million tonnes each year."

Thailand shipped 6.11 million tonnes of rice last year, up 6.68% from 5.73 million tonnes in 2020, with exports valued at 108 billion baht, down by 7.14% from 116 billion baht in 2020.

The 2021 shipments comprised 2.35 million tonnes of white rice (up 18.9%), 1.4 million tonnes of Thai hom mali rice (down 1.7%), 1.4 million tonnes of parboiled rice (up 1.6%), 550,574 tonnes of aromatic rice (down 4.1%), and 310,878 tonnes of glutinous rice (up 12.4%).

The association projects exports rising 14.8% this year to 7 million tonnes, driven by ample water supply. Higher demand is likely thanks to a global economic recovery and a favourable exchange rate.

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