Thailand may not enjoy skyrocketing rice exports any longer as record-breaking prices have prompted importing countries and traders to hold off from making purchases.
After running at 1 million tonnes monthly through the first quarter of this year, rice exports are forecast to drop by almost half to 500,000-600,000 tonnes this month, due to the rising prices as well as the long Songkran holiday.
Exporters are unanimous in their belief that the surge in global rice prices truly reflects the workings of the market mechanism, with demand soaring worldwide against a predicted drop in global stocks to 72.7 million tonnes this year. Normally supplies are maintained in the range of 80 million to 100 million tonnes.
Vichai Sriprasert, president of Riceland International, said last week that prices would be a key factor in orders falling. However, nobody can predict right now how high the rice price should be. All that can be said is that it is on the uptrend.
"It is the market mechanism that whenever rice traders face excessive prices, there is no doubt that they will delay placing orders," he said.
Rice prices are increasingly following oil prices, he said. For instance, jasmine rice rose from US$400 (Bt12,580) to $600 per tonne last year. But in just the first four months of this year, the price jumped from $600 to $1,000.
Korbsook Iamsuri, CEO of leading rice exporter Kamolkij Group, said rice importers backed off from placing orders for Thai rice after Vietnam offered a shocking bid of $1,200 per tonne to sell 25-per-cent white rice to the Philippines.
Since the price for higher-grade 100-per-cent white rice is over $700 per tonne, small and medium buyers have stayed out of the market. They have also turned to major rice exporters to bargain for lower prices. Major exporters have plenty of working capital and inventory, which leads them to have lower expenses than small and medium exporters.
Before the Philippines bidding, the market predicted that the rice price would not exceed $1,000 per tonne. Consequently, they rushed to place more orders with Thailand - but exporters here were afraid to take them due to steadily rising prices and dwindling stocks.
In fact, 25-per-cent white rice should fetch more than $900 and 100-per-cent white rice should not exceed $1,000. Importers would be at great risk from the fluctuating price if they rushed to place orders.
So far, only big markets for foreign rice such as Hong Kong still order from Thailand, but mainly for jasmine rice.
Korbsook said the Kingdom normally exports an average of 700,000-750,000 tonnes of rice per month.
The government has set an export target of 9 million tonnes of rice this year.
As of April 9, 250,000 tonnes of rice had been shipped out this month, but during the extended Songkran weekend, shipments were suspended.
"Rice exports will continue dropping for a few months," Korbsook said.
Thailand's total rice exports leaped 66.72 per cent to 3.25 million tonnes in the first quarter.
The situation should return to normal this quarter, and those holding large rice stocks will then release their supplies into the market, she added.
Phaiboon Kuonsongtum, honorary adviser to the Rice Exporters Association, said the rice price has more than doubled and it will directly hit exports. However, nobody can predict how much exports will decline.
Phaiboon, the managing director of Chaiyaporn Rice, expects the company's exports to slip by 20 per cent from the average of 70,000-80,000 tonnes per month.
"Some importers in Africa have delayed ordering from Thailand due to constrained budgets," he said.