Thai Rice Exports Seen Plunging 50% on Government Buying Program, Flooding
Rice shipments from Thailand, the largest exporter, will drop by half from November to January as a state-buying policy raises costs and flooding disrupts transport, according to the Thai Rice Exporters Association.
Exports may slump to 500,000 metric tons per month from an average of 1 million tons in the first nine months as the state purchases lift local prices and make Thai rice less competitive, Honorary President Chookiat Ophaswongse said yesterday.
Thailand implemented the rice-buying policy at guaranteed prices last month to lift rural incomes even as the worst floods since 1942 wreak damage on farms. Lower Thai exports may benefit Vietnam and India, the second- and third-largest shippers.
“The state policy will cause rice exports to fall by a greater extent than the effect of the flooding,” said Chookiat, who’s traded the staple for about 40 years. About 50,000 tons may be delayed by about a month as floods disrupt waterway and road transport, he said by phone.
The price of 100 percent, grade B Thai rice for export, a weekly benchmark for Asia, was set 1 percent higher at $628 per ton on Nov. 2. It has risen 21 percent since the July election that brought Yingluck Shinawatra’s government to power with campaign pledges that included the rice-buying policy.
Thai shipments may plunge 24 percent to 8 million tons next year, the lowest level since 2006, according to a forecast from the U.S. Department of Agriculture. The projected decline is the biggest in percentage terms since 2005.
While Thailand has suffered more flood damage than other nations in Asia, the impact on prices from the state-buying program would be more marked than the disaster, according to the International Rice Research Institute in the Philippines. India was expected to increase shipments, Samarendu Mohanty, a senior economist at the institute, said last month.
“Only some small companies should be affected by floods,” Chookiat said. “Most exporters don’t have any problem in delivering,” he said. The floods have spread over 63 of Thailand’s 77 provinces in the past three months, including the main rice-growing region, according to government data.
The floods have damaged 10 million rai (1.6 million hectares) of rice land, mostly in the Chao Phraya River basin, cutting the main harvest to about 19 million tons from 25.1 million tons forecast earlier, Apichart Jongskul, secretary- general of the Office of Agricultural Economics, said Oct. 21. That crop accounts for about 70 percent of annual output.
After the waters recede, farmers are expected to increase planting and bring total production in 2011-2012 to about 30 million tons, compared with 34.5 million tons in the previous season, Apichart said.
India, the world’s second-largest producer, allowed private companies to export non-basmati rice for the first time in more than three years in July after state-run stockpiles reached a record. Exports next year may total 4.5 million tons, 61 percent more than in 2011, USDA forecasts show.
“Orders have been very small since India lifted export restrictions,” Korbsook Iamsuri, president of the Thai rice shippers’ group, said by phone. “We don’t have clear details how soon the transport system will return to normal.”
Global rice production may gain to 482.4 million tons of milled grain in 2011-2012 from 466.6 million tons last year, according to a revised forecast from the United Nations Food & Agriculture Organization yesterday.
“Prospects for this year’s crop have improved in the main paddy-producing countries in Far East Asia,” the agency said, forecasting “strong production growth in spite of the devastating floods in several countries in South East Asia.”
Rice for January delivery fell 0.5 percent to $16.06 per 100 pounds in Chicago today, declining for the sixth day.
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