Thailand rice exports hit by strong baht, unlikely to meet 2019 goal

[webfact]

Thailand rice exports hit by strong baht, unlikely to meet 2019 goal

 

FILE PHOTO: A rice mill worker holds rice that fallen onto the ground in Udon Thani, Thailand, September 16, 2015. REUTERS/Jorge Silva/Files

By Patpicha Tanakasempipat and Panarat Thepgumpanat

 

BANGKOK (Reuters) - Thailand's rice exports fell by 12% in the first half of 2019 hurt by a strong baht, and will likely fall short of this year's target of 9.5 million tonnes, an exporter group said on Wednesday.

 

The country has been struggling to export rice at a time when the Thai baht <THB=TH> is Asia's best performing currency and is trading near its strongest in more than six years at 30.81 against the U.S. dollar.

 

Thailand, the world's second-largest rice exporter after India, shipped 4.2 million tonnes of rice between January and June, with orders in the last two months declining to as low as 600,000 tonnes per month. This was below a targeted monthly average of 800,000 tonnes.

 

"Thai rice is very expensive because of the currency exchange," Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, told Reuters.

 

"If the baht keeps strengthening below 30 against the dollar, it's game over for us."

 

Thai benchmark 5% broken rice <RI-THBKN5-P1> was quoted last Thursday at an average of $404 per tonne, significantly higher than the same grade from competitors India and Vietnam at $372.5 and $332.50 respectively. <RI-INBKN5-P1> <RI-VNBKN5-P1>

 

The association said earlier this year it aimed to export 9.5 million tonnes of rice, already a drop from 11 million tonnes in 2018.

 

But now, even reaching 9 million tonnes will be hard, Chookiat said.

 

"With a price gap like this, it's a no-brainer that buyers would go for Vietnamese rice," he said.

 

CHINA SUPPLY

Thailand also faced competition from China, as the world's biggest rice importer and Thailand's third-biggest buyer last year has been offloading its own stockpiles.

 

China has slowed trade with its two biggest partners Thailand and Vietnam this year due to large state reserves, and has been selling its stockpiles of "old rice", which ended up in the African markets previously dominated by Thailand, Chookiat said.

 

"Because China doesn't buy from Vietnam this year, Vietnam has a lot of rice to compete with us in every market. At the same time China takes our African markets," he said.

 

From January to May, Thailand has exported rice worth 3.7 billion baht ($120.1 million) to China, a 45% decline from the same period last year, according to the Thai commerce ministry data.

 

Thailand's government-to-government deal with Chinese state-owned food trader COFCO has also stalled due to China's ample rice supply.

 

As of end-2018, Thailand had supplied 700,000 tonnes of rice to China as part of the pledged deal for 1 million tonnes of the grain struck in 2015.

"From then to now, there hasn't been any new orders for the deal," Chookiat said.

 

($1 = 30.8100 baht)

 

(Reporting by Patpicha Tanakasempipat and Panarat Thepgumpanat; editing by Gopakumar Warrier)

 

-- © Copyright Reuters 2019-07-11

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[Chelseafan]

Many companies are stuck in contracts and are still buying Thai rice, when those contracts expire expect Thai rice exports to nose-dive much more steeply.

 

Edited July 10, 2019 by Chelseafan

[Matzzon]

No shit, Sherlock! That´s what happens when the real value of the baht is 38-39 to 1 euro and 46 to the pound as well as about 32-33 to the US dollar, and BoT is trying to maintian the high life of a currency on a level that is an alien concept to common sense.

[mikebell]

Add in the fall in the numbers of big-spending farangs being replaced by zero-spending Chinese/Indians and an earthquake is rumbling.

[ChrisY1]

Just rebrand this rice as organic....we're told there's huge demand for it.

[Brickbat]

Soon, the baht will be like a plate of rice! As business goes to the wall, Tourism drops off and expats bring in “ rice” money. One can also say “ beer money “ .

 

[Srikcir]

5 hours ago, webfact said:

Thailand's rice exports fell by 12% in the first half of 2019 hurt by a strong baht

Thank goodness that Prayut in March 2019 provided about 56.5 billion baht as financial aid for rice harvesting. Who would have thought that less rice harvest would be the better strategy?

 

[Cadbury]

1 hour ago, ChrisY1 said:

Just rebrand this rice as organic....we're told there's huge demand for it.

Organic certification is relatively inexpensive when purchased under the counter.

Prawns and shrimps are another major Thai export commodity but Vietnam is making a dent on those exports because of special EU tariffs which gives them a clear price advantage over Thailand, not to mention the hurt the Thai baht is doing.

In recent months it has been hard to find any positive news about the Thai economy.

Somkid needs to get out of his treasury role otherwise he will certainly fall by the sword.

Edited July 11, 2019 by Cadbury

[geoffbezoz]

2 hours ago, mikebell said:

Add in the fall in the numbers of big-spending farangs being replaced by zero-spending Chinese/Indians and an earthquake is rumbling.

Unfortunately though when the sh$t hits the fan,  the utterly corrupt Junta, Elite and every brown noser to the ones above will not suffer as they have already moved their ill-gotten billions overseas.  It will be, as usual, the poorer Thais who will have to survive with a ruined economy. When will they ever learn "no pain no gain" ?

Edited July 11, 2019 by geoffbezoz

[fforest1]

Who cares--Let them eat cake---Woops I ment rice..

[Isaan sailor]

Gotta love it.  Soon Thailand will have to import rice from China and India—because it will cost less!

[transam]

1 minute ago, Isaan sailor said:

Gotta love it.  Soon Thailand will have to import rice from China and India—because it will cost less!

That reminds me of British coal.....

[hotchilli]

7 hours ago, webfact said:

hailand rice exports hit by strong baht, unlikely to meet 2019 goal

More cries from the north... shame they didn't have the sense to vote Prayut out !

Som nam na

[marcusarelus]

2 minutes ago, hotchilli said:

More cries from the north... shame they didn't have the sense to vote Prayut out !

Som nam na

What do you think any politician can do about the strength of the baht.  Cause none of them have a clue nor does America or the International Monetary Fund or the World Bank.  

[Eric Loh]

7 minutes ago, hotchilli said:

More cries from the north... shame they didn't have the sense to vote Prayut out !

Som nam na

With the Agriculture ministry under the Dem's hand, the rubber farmers will be their main focus as they shored up their support base in the South. Som nam na indeed.  

[DLock]

Don't worry, the 425 baht daily salary will increase production and boost flagging sales.

 

[BuddyPish]

3 hours ago, mikebell said:

Add in the fall in the numbers of big-spending farangs being replaced by zero-spending Chinese/Indians and an earthquake is rumbling.

Excuse me?
You mean the big spending farangs who are complaining about a few baht on the exchange rate?
Don't make me laugh

[RichardColeman]

I get the feeling when the dam finally does burst, it's going to burst in style !

[Bert Jones]

It's not a few baht...its 16 baht in my case...a drop from 54 to 38...that's 30%...30% increase in rent and food and everything I purchase...in just 3 short years. If you rely on a UK state pension - you're feeling the pinch!

[fulhamster]

43 minutes ago, hotchilli said:

More cries from the north... shame they didn't have the sense to vote Prayut out !

Som nam na

They thought that they had -- until 18 other parties joined up with them

[fulhamster]

2 minutes ago, Bert Jones said:

It's not a few baht...its 16 baht in my case...a drop from 54 to 38...that's 30%...30% increase in rent and food and everything I purchase...in just 3 short years. If you rely on a UK state pension - you're feeling the pinch!

Good post. Sums it up well.

 

Most Brits are not retired pilots or oil workers

[marcusarelus]

17 minutes ago, RichardColeman said:

I get the feeling when the dam finally does burst, it's going to burst in style !

First time I heard that was wen I put my money in a Thai bank in 2005.  It does get old after a while.  Why would you think your feelings are more accurate than all of the bankers in the world?  Because none of them see the baht falling much at all.  

[fforest1]

7 minutes ago, marcusarelus said:

First time I heard that was wen I put my money in a Thai bank in 2005.  It does get old after a while.  Why would you think your feelings are more accurate than all of the bankers in the world?  Because none of them see the baht falling much at all.  

If the Baht keeps raising Thailand is DEAD DEAD DEAD....Its just that simple....

[Cadbury]

7 hours ago, webfact said:

Thailand rice exports hit by strong baht, unlikely to meet 2019 goal

Why doesn't the government introduce a rice pledging scheme to buy the excess rice at a guaranteed inflated price to farmers. The government could then store it and when demand and prices increase they can than sell it and make a killing. 

The irony of the Yingluck scheme is that in 2016 Prayut and his junta gang were so bereft of ideas to counter the losses of rice market so they reinvented the Yingluck scheme except that farmers were given a financial inducement to store it themselves.

I am reminded that because of the Yingluck scheme which held back rice from the market Vietnam and India stepped in to fill the export void and knocked Thailand off top spot as rice exporter and established permanent markets and customers which were traditionally Thai. That situation seem to remain.

If there is anything that can be stuffed up Thai governments manage to do it with ease. IMO the one which stole power in 2014 is no exception.

[marcusarelus]

1 minute ago, fforest1 said:

If the Baht keeps raising Thailand is DEAD DEAD DEAD....Its just that simple....

All currencies go up and down.  When they get too expensive for people to buy exports the exports go down and the economy goes down and the baht goes down.  Not dead but a simple normal cyclical behavior.  BTW there is nothing simple about it.  If it was simple everyone would be a millionaire.   

[fforest1]

2 minutes ago, marcusarelus said:

All currencies go up and down.  When they get too expensive for people to buy exports the exports go down and the economy goes down and the baht goes down.  Not dead but a simple normal cyclical behavior.  BTW there is nothing simple about it.  If it was simple everyone would be a millionaire.   

I agree but the Baht has mostly been going up for many years now...

[zydeco]

8 hours ago, webfact said:

China has slowed trade with its two biggest partners Thailand and Vietnam this year due to large state reserves, and has been selling its stockpiles of "old rice", which ended up in the African markets previously dominated by Thailand, Chookiat said.

 

"Because China doesn't buy from Vietnam this year, Vietnam has a lot of rice to compete with us in every market. At the same time China takes our African markets," he said.

So Thailand's Chinese "friends" are destroying Thailand's strongest agricultural export commodity. Enjoy the trains and submarines, guys.

[Bert Jones]

The Chinese government only care about China...they are not a charity for other Asian countries.

[overherebc]

1 hour ago, marcusarelus said:

What do you think any politician can do about the strength of the baht.  Cause none of them have a clue nor does America or the International Monetary Fund or the World Bank.  

How big a player in world finance is the baht?

[Eric Loh]

Lots to blame on the loss 5 years of incompetency governance and lack of efforts by the commerce and agriculture ministries to find new markets for rice. Too much dependent on our traditional markets while India expanded their markets in the middle east, Africa and into Europe. The previous junta has been seating on their hinds for too long and it has now come back to haunt their lack of marketing efforts.