Production of Thailand’s main rice crop may decline by at least 10 percent in the season starting October as delayed rains followed by possible flooding may hurt crops, according to the Thai Rice Mills Association.
“Production of the main crop may be damaged,” Banjong Tungjitwattanakun, the association’s vice president, said in a phone interview. Thailand, the largest exporter, usually produces about 23 million metric tons of unmilled rice from the main crop, accounting for about 75 percent of its output.
The Thai government advised farmers to postpone planting to the end of July because of delayed rains and warned of possible crop damage after the Meteorological Department said there may by heavy rains and flooding in September and October.
This is the second time this year the authority has advised farmers to delay planting as the El Nino weather pattern reduced rainfall. The main rice crop is usually planted in May and harvesting begins in October.
Falling supplies may drive the price of Thai 100 percent grade-B white rice, the benchmark for Asia, to $500 a ton by the end of the year, Banjong said.
Thai rice prices have recovered from a two-year low of $469 a ton on June 9 as a strengthening local currency makes exports more expensive. The price of 100 percent grade-B white rice gained 1.7 percent today to $479 a ton. That’s near the lowest since February 2008, when the price averaged $466.25, according to data from the Thai Rice Exporters Association’s website.
Rough rice futures traded in Chicago have tumbled 27 percent this year. The September-delivery contract lost 0.2 percent to $10.82 per 100 pounds at 4:02 p.m. in Singapore.
‘Double Impact’
“Farmers will suffer from the double impact of drought and flood,” Banjong said. “Drought already damaged 38 percent of the current crop, lowering output to 5 million tons from 8 million estimated earlier.”
Drought has damaged crops in 20 of Thailand’s 76 provinces, mostly in the north and northeast, which are major planting areas for rice and sugar. Drought linked to the El Nino weather pattern has affected a swathe of Asia, damaging crops from southern China to Southeast Asia.
“In the next season, total production may decline from a normal level of around 31 million tons,” said Banjong. The extent of the impact has yet to be assessed, he said.
Production may be even lower than estimated as some farmers will likely shift to crops that yield better returns, such as sugar cane, cassava, corn and rubber, as rice prices decline, Banjong said.
(bloomberg.com)
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