Thailand
Thailand: Rice exporters fear strong baht may bite shipments
Rice exporters have voiced growing concerns about the strong baht, saying earlier projections of 9.5 million tonnes of rice shipments for this year may be hard to achieve.
Charoen Laothammatas, president of the Thai Rice Exporters Association, said in light of the baht’s strength, most exporters are likely to avoid selling rice for fear of foreign exchange losses.
“This will eventually affect farmers’ income, as they fail to sell their output as exporters delay their purchases,” said Mr Charoen.
Traders have submitted a letter to the Bank of Thailand asking it to help stabilise the baht, but did not receive a response, he said.
Mr Charoen said exporters have called on the central bank to help keep the exchange rate at 33-33.5 baht against the US dollar, keeping Thai exports competitive.
“We’re not concerned about the daily minimum wage hike, as we’ve already adjusted for that some time ago, using more machines and higher technology,” he said. “What we’re concerned the most about is the baht’s strength, which may hit our rice exports hard, although strong demand for Thai rice is anticipated from Iran, the Philippines and Indonesia.”
Chookiat Ophaswongse, honorary president of the association, agreed, saying the baht, which appreciated 9.2% last year and 3.2% in January, is the greatest threat to Thailand’s rice exports this year.
“The baht strength has significantly weakened the competitiveness of Thai rice,” he said. “Every single baht [gain against the dollar] is estimated to raise the free-on-board prices of Thai white rice by US$12.5 [292 baht] per tonne and those of Thai hom malirice by $35 a tonne. It’s a must for the government to take care of this.”
Mr Chookiat said Thai white rice is now quoted at $429 a tonne, while Vietnamese grains are quoted at a more competitive rate of $338 per tonne, thanks to the weakened dong.
“The worry is the production of Vietnam’s main crop, which is scheduled to be churned out in February,” said Mr Chookiat. “This may weaken overall global rice prices.”
Last year, Thailand exported a record high of 11.6 million tonnes of milled rice, up 17.4% from a year before, fetching $5.16 billion.
The top five importers of Thai rice were Benin, China, South Africa, Cameroon and the US.
The association in January predicted Thailand’s rice exports would dip to 9.5 million tonnes this year because of depleted state rice stocks and lower Thai hom mali rice output because of heavy rains in many areas.
The Agriculture Ministry projects rice production for the 2018 season at 30 million tonnes of paddy rice or 22-23 million tonnes of milled rice, similar to last season.
But the association said such production is uncertain, citing weather volatility, while domestic consumption is estimated to exceed 10 million tonnes of milled rice this year, in part because of rising tourist arrivals.
Source: https://www.bangkokpost.com/business/news/1405294/rice-exporters-fear-strong-baht-may-bite-shipments