January 16, 2020 / 5:53 AM / 6 days ago

Thailand's 2020 rice exports forecast to fall to lowest in seven years

BANGKOK, Jan 16 (Reuters) - Thailand’s rice exports in 2020 are forecast to drop to their lowest in seven year, the country’s rice exporters group said on Thursday, as the strong baht reduces the competitiveness against other shippers.

Exports from Thailand, the world’s second-biggest exporter of the commodity after India, are expected to drop to 7.5 million tonnes this year, the Thai Rice Exporters Association said. That would be the lowest volume since Thailand exported 6.6 million tonnes of rice in 2013.

The grim forecast came after Thailand fell short of its initial 2019 target by exporting 7.8 million tonnes of rice last year.

Thai rice export volumes have declined for two consecutive years since hitting a record 11.60 million tonnes in 2017.

“We’re being optimistic when we give the 7.5 million tonnes forecast,” Chookiat Ophaswongse, honorary president of the exporters association, told Reuters.

“This year looks worse than the last, because of even more apparent price differences.”

Thai benchmark 5% broken rice RI-THBKN5-P1 prices have remained high well into 2020, after trading significantly higher than the Vietnamese variety throughout 2019 mainly because the baht rose in value relative to other currencies. Thai prices were about $75 a tonne higher than Vietnamese cargoes last week.

The baht was Asia’s strongest-performing currency in 2019, appreciating by nearly 9%. It is currently trading near the highest in more than six years.

Drought - which has been declared in 18 provinces in the central, northern and northeastern farming regions - also threatens to reduce supply in 2020, driving up local rice prices.

Thailand’s dry season started in November and usually lasts through April, although authorities said it could go on through June this year.

Earlier this month, the U.S. Department of Agriculture estimated Thailand’s total output this year at 18.5 million tonnes of milled rice, down 9% from last year.

Last year, Thailand’s commerce ministry gave a similar forecast for 2020 rice exports of 8 million tonnes. (Reporting by Patpicha Tanakasempipat and Panarat Thepgumpanat; Writing by Patpicha Tanakasempipat; Editing by Christian Schmollinger)

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