January 19, 2005

 

 

Thailand's Corn Exports To Fall In 2005 Due To Increase In Domestic Corn Consumption

 

An expected rise in domestic corn consumption amid easing concerns over bird flu will lead to lower corn exports by Thailand in 2005

 

According to the president of the Thai Feed Mill Association, Virachai Ratanabanchuen, poultry farming is seen to pick up this year, boosting demand for corn and reducing the availability of the grain for exports.

 

"We won't have (plenty of) corn to export (in 2005). I expect exports in 2005 to fall to around 500,000 to 700,000 (metric) tons," Virachai said.

 

Corn consumption was considerably lower last year as the bird flu epidemic, ravaging Thailand since last January, reduced poultry farming to unprecedented low levels.

 

Shrinking local use in turn boosted Thai corn exports to 958,954 tons in 2004, the highest level in about a decade, data from the Office of Agricultural Economics, or OAE, showed.

 

Thailand, a big consumer of corn, normally exports only small quantities, with just 190,293 tons exported in 2003, according to data from the OAE.

 

Corn is the main ingredient in poultry feed, constituting around 50% of the raw material used in chicken feed. Soymeal, full-fat soy and other ingredients make up the rest.

 

Following the bird flu outbreak in 2004, domestic corn consumption was estimated to have fallen almost 50% as millions of birds died or were culled and chicken farming was suspended in many provinces.

 

Thailand consumed 4.1 million to 4.2 million tons of corn a year prior to 2004, nearly matching its local annual output.

 

"Chicken raising has already bottomed out and will be escalating from now on," Virachai said.

 

Broiler output in 2004 totaled 699 million birds, a sharp decrease of 37.5% from production in 2003, data from the OAE showed.

 

Virachai said corn consumption this year will be substantially higher than in the previous year but did not give a forecast for 2005.

 

Local demand for chicken is rising while exports of cooked chicken are also expected to go up.

 

Imports of raw chicken from Thailand are still banned by several countries but the European Union and Japan, major importers of Thai poultry products, now accept cooked chicken.

 

Drought Damages Corn Crop, Supports Prices

 

Besides rising domestic demand, a drought in major growing areas has damaged the corn crop and reduced availability for exports, Virachai said.

 

"The second-crop corn output, which is entering the market now through February, will fall by around 40%-50% (from last year's production) due to drought."

 

The second-crop corn account for around 15% of the country's total corn production.

 

Thailand's corn crop year runs from July to June, with harvesting of the first crop peaking in September and the second crop peaking in February.

 

Some of the main-crop corn was also damaged by drought, Virachai said.

 

The drought might have damaged 200,000 tons of corn from the main crop, said a government official, citing a recent forecast by the Agriculture and Cooperatives Ministry.

 

"Total corn output (in the 2004-05 crop year) is forecast around 4 million tons or lower, down from around 4.2 million to 4.3 million tons" in the previous year, he said.

 

Corn prices in Thailand are already reflecting the expected drop in production, Virachai said.

 

Ex-feed mill prices of corn are around 5.50 to 5.53 baht a kilogram, according to the Department of Foreign Trade at the Commerce Ministry.

 

"Prices could go up further as output declines while consumption increases," Virachai said.

 

Higher prices will further limit corn exports by Thailand, according to Virachai.

 

"Importers are taking corn from the US, Brazil and Argentina because prices are (lower) than (that of) Thai grain, while the quality is better."

 

Taiwan, Malaysia, Singapore and Indonesia are the major buyers of Thai corn, while South Korea emerged as an importer last year.

 

Importers such as Taiwan and South Korea bought big quantities from Thailand last year amid lower prices compared with prices in Brazil, Argentina and the US

 

But the trend has reversed since then, with local demand picking up again at a time when production is expected to slow.

 

Export prices of Thai corn currently average $142/ton, free-on-board Bangkok.

 

In comparison, international prices are currently in the $135-$140/ton range, according to corn traders.