January 8, 2009

Thailand's corn production this year will increase while soy output will fall slightly, according to forecasts by the Office of Agricultural Economics (OAE).

Corn production will increase 1.46 percent to 3.79 million tonnes after high prices encouraged farmers to expand their planting area, said the forecast report. However, the report also said demand increase by only 1 percent to 3.86 million.

The rising consumption is attributed to the melamine contamination of dairy products and feed meal in late 2008, as well as a larger EU import quota for Thai chickens.

Corn demand is increasing worldwide, but prices will not return to the high levels of last year due to lower oil price and strong US dollar, said the report.

The report said Thailand's soy seed production is seen to fall 0.52 percent to 192,000 tonnes as farmers shift planting areas to the more lucrative sugarcane.

The report said Thailand's soy seed demand will grow by 0.17 percent to 1.74 million tonnes, with the high demand prompting the government to allow the import of 1.55 million tonnes.

Global soy seed prices are expected to fall 5-6 percent due to the world economic slowdown and falling oil prices. China, the world's largest soy oil consumer and importer, is also seen to reduce imports due to higher domestic production.

The report said Thailand's total cassava production will jump 15.89 percent to 29.15 million tonnes, as farmers increased planting areas in view of high prices and demand.

The Commerce Ministry established two teams to monitor Thailand's exports and commodity prices on Tuesday (Jan 6). The ministry also plans to spend THB1.18 billion (US$33.8 million) of the government's budget to subsidise farm crops to ease farmers' cost of living.

The OAE's forecasts are based on global and local factors such as production, trading, supply and demand, exchange rates and oil prices.