Thai rice exports in Q3 slow down as prices rise

Thailand exported 5 million tons of rice in the first six months of the year but third-quarter shipments show signs of slowing down because of higher prices compared with competitors, with buyers delaying purchases as rice from Vietnam, India and Pakistan floods the market. 

Thai rice exports have been strong in the first five months of this year. According to data from the Ministry of Commerce, in cooperation with the Customs Department, 4.05 million tons of rice were exported, valued at 94,640.91 million baht, an increase from the same period in 2023 when 3.48 million tons were exported. 

The Department of Foreign Trade and the Thai Rice Exporters Association expect that Thailand will exceed its annual export target of 7.5 million tons, potentially reaching 8 million tons (compared with 8.7 million tons exported in 2023).

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said it is expected that Thailand will have exported around 5 million tons of rice in the first six months of this year, thanks to high global demand for rice, driven by many countries' concerns over food security. 

"The weakening of the Thai baht to around 36-37 baht per US dollar has also helped improve price competitiveness, along with India's continued ban on exporting white rice," Chookiat said

Previously, there were significant orders for Thai rice, which pushed domestic and export rice prices up. The price of 5% white rice, Thailand's most exported type, averaged US$649 and $630 per ton for May and June respectively. 

The average price for unhusked rice that farmers could sell was 11,000 baht per ton, considered high, encouraging farmers to continue planting rice to benefit from the favourable conditions.

"In the first six months, we have already exported about 5 million tons of rice," Chookiat said. “Intense competition among exporters to buy rice for export has driven domestic prices up. However, new orders have become scarce because our prices are much higher than those of competitors, resulting in a quiet third quarter across all markets. 

“Additionally, rice production in competitor countries like Vietnam, India, Pakistan and Myanmar has improved, leading to more rice in the global market. India has also signalled a return to exporting white rice in the fourth quarter of this year, which will compete for market share and is likely to drive global rice prices down, potentially lowering Thai domestic rice prices as well." 

He also said that in the first half of this year, Indonesia was the No 1 importer of Thai rice, importing about 1 million tons of 5% white rice. The Indonesian government announced plans to import 3.6 million tons of rice this year, primarily from Vietnam and Thailand, as well as Pakistan, Myanmar and Cambodia. 

BULOG, Indonesia's rice import agency, has been holding monthly tenders for rice imports, averaging around 300,000 tons per month. If Thai rice prices meet their target price, it will be ordered; otherwise, orders for that month will be cancelled if prices are too high.

"The Thai and Indonesian governments have previously discussed that Indonesia would like to purchase 2 million tons of Thai rice this year," Chookiat said. “So far, 55,000 tons have been exported on a G2G [government-to-government] basis. 

“However, BULOG has recently shifted to G2P [government-to-private] purchases for quicker transactions, as G2G deals involve slower government processes. It is expected that Indonesia will import at least 1.5 million tons of Thai rice this year, depending primarily on price." 

Nonetheless, it is expected that Thailand will export no less than 8 million tons of rice this year. Moving forward, monthly exports are expected to be around 500,000 to 600,000 tons, down from an average of 850,000 to 900,000 tons per month in the first half of the year.