Thailand lowers 2015 rice output forecast by over 2 mln tonnes

Thailand lowers 2015 rice output forecast by over 2 mln tonnes

A drop in output in Thailand, one of the world's top rice exporters, could underpin benchmark Thai prices of the grain. Prices are near their lowest since January 2008 amid a massive overhang of rice stocks built up under the previous government's buying program.

The Ministry of Agriculture and Cooperative's Office of Agricultural Economics said that Thailand will produce 24,135,450 tonnes of main-crop rice this year, lower than its previous forecast of 26,576,150 tonnes.

The estimate comes after Thailand asked rice farmers last week to delay planting their main crop in the fertile Chao Phraya River Basin area as the country battles drought in 16 out of 76 provinces.

Although the wet or monsoon season has begun, dozens of provinces are still contending with drought conditions. Last week, Thailand's finance minister said drought was threatening Thailand's already sputtering economy and could cut economic growth by 0.5 percentage points this year.

Thailand has around 15.4 million tonnes of rice in storage, accumulated under the previous government's rice-buying programme that left the grains hanging over markets.

The government plans to sell around 5.89 million tonnes of deteriorated rice held in stockpiles to the industrial sector starting in July, Duangporn Rodphaya, director general of the Commerce Ministry's Department of Foreign Trade, told reporters on Wednesday.

Price of Thailand's benchmark five-percent rice fell to its lowest level in over seven years last month, when quoted at $365-$368 a tonne, FOB, on June 17.

The U.S. Department of Agriculture's (USDA) latest estimate expects Thailand to produce around 19.8 million tonnes of milled rice in the 2015/16 crop year, up from 18.8 million in 2014/15, as yields improve.

The USDA will revise its figures for Thailand's rice output by around mid-July, the USDA's agricultural specialist in Bangkok told Reuters.

Source: Reuters