English
Thai rice exports hit by strong baht, unlikely to meet 2019 goal
* Thai prices significantly higher vs Vietnamese, Indian rice
* Thai rice exports expected to fall short of 9.5 mln T target
* Thailand faces new competition as China offloads own stockpiles
By Patpicha Tanakasempipat and Panarat Thepgumpanat
BANGKOK, July 10 (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 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)
Source: https://af.reuters.com/article/commoditiesNews/idAFL4N24B1Z3