Rising domestic rice prices unsettle Thai exporters
Rice exporters have expressed growing concerns about shipment prospects in the second quarter, as a sharp rise in domestic prices may lead importers to baulk at buying Thai grains.
Chookiat Ophaswongse, an honorary president of the Thai Rice Exporters Association, said 5% white rice prices in the domestic market have risen by 25% to 15 baht per kilogramme, up from 12 baht per kg at the beginning of this year, driven by high import demand, particularly from Iraq.
The rise in domestic rice prices has outpaced that of export prices, as free-on-board prices of white rice have increased by 15% from US$400 per tonne in the same period to $460 per tonne.
"More expensive Thai rice may prompt importers to have a wait and see approach in buying more Thai rice in the second quarter, possibly leading Thailand to lose an export opportunity," Mr Chookiat said.
"The surging domestic price has been driven largely by huge demand from Iraq, which has starting buying Thai rice again after halting its imports for many years."
Thailand has exported more than 200,000 tonnes of rice to Iraq since the beginning of this year, with the association expecting the Middle Eastern country to buy at least 400,000 tonnes in 2022.
In the first quarter, Thai rice exports reached 1.74 million tonnes worth 29.5 billion baht, up by 48.5% and 30.8% respectively compared with the same period last year. The gains were attributed to strong demand and a weak baht, which made Thai rice prices more competitive.
The association expects Thai rice prices to increase by another 5%, or $20 a tonne, in the second quarter this year.
The group forecasts Thailand's rice exports to top at least 8 million tonnes this year, outperforming an earlier target of 7 million tonnes. Export values are estimated at 130 billion baht, up from 110 billion last year.
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 and 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.
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 in 2020. The 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%).