NEWS & UPDATES
EXECUTIVE SUMMARY
Thai rice outputs are expected to contract through 2024 from the effects of the El Niño, which led to the delayed onset of the rainy season and reduced access to water. Therefore, in some areas, plantings have been abandoned, or the output per rai has slipped. However, total outputs will trend upwards through 2025 and 2026 due to the transition to La Niña conditions in the third quarter of 2024 that will boost rainfall, while higher prices will also encourage farmers to extend the area under cultivation. However, growers will remain saddled with high production costs. Domestic consumption from 2024 to 2026 will be boosted by the recovery of the restaurant, hotel, and food processing industries. Meanwhile, export markets will see slow growth through 2024, thanks to the suspension of exports of rice from India and the impacts of war and natural disasters on worries over food security and the need to maintain higher inventories. Nevertheless, exports are expected to weaken again in 2025-2026, as Indian rice returns to international markets and supply from other, more competitively priced producers expands, leaving less space in the market for Thai products. Thai rice prices are likewise forecast to remain elevated in 2024 before softening in 2025 and 2026 on the expected expansion in supply.
Overview
Rice cultivation accounts for 49.1% of all Thai farmland1/ and 5.2 million households (or 67.1% of those in the agricultural sector2/) are involved in the industry, making this Thailand’s most important crop and its major agricultural export. Given their dominance within the agricultural sector, rice farmers have naturally long been the recipients of government aid. This has included assistance with production costs, harvesting and crop improvement schemes, the provision of credit related to inventory building and the creation of added value, and projects that aim to improve management and quality control procedures.
Thailand is a globally important producer and exporter of rice, and in the 2022/2023 growing season, Thai outputs were sufficient to place the country 6th in the world rankings of production; by volume, Thai-grown rice accounted for 4.1% of global outputs, coming after China, India, Bangladesh, Indonesia and Vietnam, which produced respectively 28.3%, 26.3%, 7.0%, 6.6%, and 5.2% of the global total. Considering just exports though, Thailand ranked 2nd globally, having a 16.0% share of the global market after India, which supplied 37.1% of the total. Other competitors that Thailand faces on global markets include Vietnam, Pakistan, and Cambodia (Figure 1). However, because rice is overwhelmingly grown for domestic consumption and to ensure domestic food security, only 10.6% of global outputs finds its way to world markets (Figure 2), with exports coming from any surplus that is available after domestic markets have had their share. Imports are mostly made by countries in Africa and Asia (Figure 3).
Read full story here Industry Outlook Rice Industry | Industry Outlook
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Industry Outlook 2023-2025: Rice Industry
EXECUTIVE SUMMARY
Domestic rice outputs are likely to dip slightly over 2023-2025 due to the likely emergence of El Niño conditions and a resulting decline in the volume of rain and the availability of irrigation water. Outputs will also be hurt by high operating costs, despite ongoing government support for the agricultural sector. However, domestic demand is expected to rise over the next few years on stronger demand from restaurants, hotels, and the food industry as well as downstream industrial consumers, most obviously food processors. Exports are also forecast to expand on a combination of rising purchasing power in overseas markets and continuing worries over food security due to the extension of the war in Ukraine. This combination of tightening supply and strengthening demand on domestic and export markets will lift prices for Thai rice, but the effect of this will be to expose exporters to intensified competition for market share, especially from Indian and Vietnamese products since on cost, Thai goods will be at a relative disadvantage to these.
Overview
Rice has long been Thailand’s major agricultural export, with its cultivation accounting for 43.7% of all Thai farmland1/, and 5.1 million households (or 63.6% of those in the agricultural sector2/) are involved in its cultivation. Rice farmers have thus naturally long been the recipients of government aid. This has included price policies, such as price guarantees, rice-pledging schemes, and a mix of other programs that include financial assistance with planting and harvesting costs and help with the development of new rice varieties.
Thailand is a globally important producer and exporter of rice, and in the 2021/2022 growing season, Thai outputs were sufficient to place the country 6th in the world rankings of raw production; by volume, Thai-grown rice accounted for 4.0% of global outputs, coming after China (29.0% of total output), India (25.2%), Bangladesh (7.0%), Indonesia (6.7%), and Vietnam (5.2%). Considering just exports though, Thailand ranked 2nd globally, having a 13.5% share of the global market after India, which accounted for 38.8% of the total. Other competitors that Thailand faces in global markets include Vietnam, Pakistan, Myanmar, and China (Figure 1). However, because rice is overwhelmingly grown for domestic consumption and to ensure domestic food security, only 11.1% of global outputs ends up on world markets (Figure 2), with exports coming from any surplus that is available after domestic markets have had their share. The result of this is that global supply and demand may be somewhat turbulent, with imports mostly being made by countries in Africa, the Middle East, and Asia (Figure 3).
Read full story here Industry Outlook Rice Industry | Industry Outlook (krungsri.com)
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Thailand cuts 2022 growth to 3.2% as Ukraine war hits prices
Central bank hopes tourism recovers in 2023 to push GDP expansion to 4.4%
BANGKOK — The Bank of Thailand on Wednesday revised down the country’s growth forecast to 3.2%, from 3.4% it predicted in December, as sanctions on Russia after its invasion of Ukraine send prices higher, weighing on the economy.
“Sanctions against Russia have pushed the cost of goods higher but will not derail the overall recovery path,” said Piti Disyatat, an economic research director at the central bank’s monetary policy group. The central bank, separately, kept interest rates steady at 0.5% at a meeting on Wednesday.
“The key reason [for revision] is the oil price which is expected to remain high, while the war is expected to cause supply shock. However, we still believe that the Thai economy will continue to grow,” he added. The Bank of Thailand expects the economy to grow by 4.4% in 2023, if the tourism sector recovers.
In that calculation, the central bank factored in 5.6 million foreign tourist arrivals that it hopes will help the economy to turn around from pandemic effects. Tourism makes 20% of the country’s gross domestic product.
Wednesday’s downward revision was in line with expectations of other economists, who said that one impact of Russia’s invasion was inflation. SCB’s Economic Intelligence Center also cut Thai 2022 GDP forecast, to 2.7% from 3.2%.
Thailand was already battling high prices before Russia invaded Ukraine on Feb. 24. The price of pork has jumped over the last year as authorities tried to contain African swine flu by culling millions of pigs. The rise in pork prices in turn pushed up prices of other meat products and poultry.
Now, oil and energy prices are also higher, with the central bank expecting inflation to rise to 4.9%, from 1.7% in its previous forecast. The February consumer price index had jumped to a 13-year high of 5.28%.
Read full story at Thailand cuts 2022 growth to 3.2% as Ukraine war hits prices – Nikkei Asia
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Industry Outlook 2022-2024: Rice Industry
Executive Summary
For Thai farmers, outputs of rice will tend to strengthen over 2022-2024, helped by what is forecast to be better weather, higher rainfall, and a greater supply of irrigation water. In addition, government support for rice growers, in particular income guarantees that are expected to be ongoing, will encourage farmers to expand the area under cultivation and/or the number of plantings. Domestic demand will rebound with recovery in restaurants, hotels, and downstream food-processing industries, while overseas sales will improve with strengthening consumer spending power in export markets. Exports will be helped further by prices for Thai rice that will tend to soften on higher outputs, and by the easing of problems with transport and logistics caused by COVID-19 that plagued the global economy through 2020 and 2021. However, despite this broadly positive outlook, exporters will be exposed to a degree of risk arising from stiffening competition from other rice-exporting nations, including India and Vietnam, which are developing new strains of rice that produce higher yields and carry lower costs.
Read full story here Industry Outlook Rice Industry | Industry Outlook (krungsri.com)
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Industry Outlook 2021-2023: Sugar Industry
Overview
Sugar is derived from plants and is used to increase sweetness[1]. There is strong global demand for sugar, both directly and indirectly. In the latter case, it is used as additive or flavoring in a wide range of products, including food, beverages, processed dairy products (milk, butter, yoghurt, etc.), candy, and baked goods. In 2019, sugar[2] accounted for 65.7% of all sweeteners consumed globally, with the remainder attributed to non-nutritive sweeteners. These include natural products such as honey, stevia and monkfruit (also called luohan guo), artificial sweeteners including aspartame cyclamate and erythritol, and dietary fibers (e.g., maltrodextrin fructo-oligosaccharides and inulin) (Figure 1).
Read full story here Industry Outlook Sugar Industry | Industry Outlook (krungsri.com)
