March 27, 2005
 
Thailand's annual corn output forecast at 4.1m tonnes
 

 

THAILAND'S corn production for the market year July 2005-June 2006, is forecast at 4.1 million tonnes. This is down slightly from the previous market year, in anticipation of drier weather conditions, which would lessen yield potential, as nearly all corn is rain-fed.

 

According to the latest USDA market report, planted areas are expected to decline slightly to 1.1 million hectares, as farmers tend to shift to more drought-resistant crops such as cassava. Also, cassava prices are currently attractive at 1.3 baht/kg, up around 60 percent from the previous year.

 

For the current market year 2004/05, corn production has also been revised down slightly to 4.2 million tonnes, as second crop production, accounting for about 20 percent of total production, was adversely affected by drought. Meanwhile, main crop production was excellent in the major growing areas due to favourable seasonal rainfall.

 

Feed consumption
 

2005/06 feed demand will likely recover to 10 million tonnes, compared with the previous year's 8-9 million tonnes which was caused by a sharp drop in poultry production resulting from the outbreak of avian influenza (AI).

 

Feed corn consumption, accounting for about 40-50 percent of total feed demand, is forecast to increase to 3.9 million tonnes, up slightly from the previous year, in response to the gradual recovery in boiler production by around 5 percent, and anticipated strong recovery in layer production by about 20 percent after a sharp reduction in the previous year.

 

MY 2004/05 feed corn consumption is estimated at 3.6 million tonnes, due to the reoccurrence of avian influenza in late June 2004. The Department of Livestock Development announced the latest outbreak on July 3, 2004.

 

The cumulative figures from the AI outbreak in Thailand from July 23 - Sept 3, 2004 were 119 cases in 26 provinces, less serious than the first outbreak (Jan 23 - May 24, 2004) when about 30 million birds were destroyed, based on 190 cases in 42 provinces.

 

The affected population was mostly native chickens, ducks, and chicken and quail layers. 373,698 poultry and 35,000 quail eggs were destroyed.

 

2004/05 feed consumption is expected to increase slightly from the previous year in light of the anticipated recovery in poultry production in the second half of the year. Poultry feed, composed of corn (60 percent) and soymeal (30 percent), accounts for about half of total feed demand.

 

In addition, feed corn was partly substituted for by relatively cheaper broken rice (400,000-500,000 tonnes) in swine feed, accounting for about 36 percent of total feed demand. As a result the swine feed ration is currently composed of 20 percent broken rice, 25 percent corn (as opposed to 45 percent in the past), and 20 percent soymeal.

 

 

Trade
 

2005/06 corn exports would likely continue to decline sharply due to limited exportable supplies resulting from the tight supply and the recovery in domestic demand for feed corn. However, export levels are expected to be above the average annual exports of around 146,000 tonnes during the poultry export boom period. The import suspension on uncooked chicken meat by importing countries is expected to continue.

 

In MY 2004/05, corn exports are estimated at 600,000 tonnes, down slightly from the previous year's export surge resulting from the AI outbreak-triggered release of feed millers' stocks of feed corn.

 

South Korea, importing up to 263,475 tonnes in the second half of 2003/04, would likely shift to Chinese corn this year due to the aflatoxin concerns.

 

Malaysia and Indonesia are still the major markets for Thai feed corn, accounting for about 75 percent of Thailand's total feed corn exports, mostly due to the freight cost advantage against feed corn sourced from China and Argentina. Currently, Argentine corn is offered at US$140/tonne, C&F in Malaysia, while Thai corn would likely be quoted at US$130/tonne, FOB in order to compete with Argentina's.

 

As for imported corn, import demand for corn is estimated to increase in 2004/05 from neighbouring countries, particularly Laos and Cambodia, as they enjoy duty-free privilege.

 

 

Policy
 

The government has implemented a mortgage scheme for 2004/05 crop from September to end-2004 in order to stabilise domestic prices during the harvest period. The loan rates were set at 4.4 Baht/kg (about US$115/tonne) for 14.5 percent moisture content. Deductions will be taken for moisture above the specified level.

 

As of December 31, 2004, the government bought only 42,854 tonnes of corn, out of the target of 800,000 to 1 million tonnes. Also, the government remains focused on the administration of a minimum tariff rate quota.

 

The import quota in 2005 would be 54,700 tonnes at 20 percent in-quota rate, following the WTO agreement. In general, shipments will be allowed only from Mar 1 to Jun 30, when domestic production is minimal. However, in 2004, the government allowed the duty-free imports of 500,000 tonnes during Jun 8 - Jul 15, 2004 to ease the tight domestic supply situation resulting from aggressive export demand in the first half of 2004. However, there were no imports under this extended period due to high freight costs and limited time.

 

As for out-of-quota imports, the tariff rate will be at 73 percent with a surcharge of 180 baht/tonne. Non-WTO countries are also subject to a 2.75 baht/kg charge, and a special charge of 10.22 percent (the sum of both of these charges is close to 73 percent) plus a surcharge of 180 baht/kg. However, according to the Economic Cooperation Strategy, for cooperation between Cambodia, Laos, Burma, and Thailand, imports of feed corn from these countries by the other countries are duty-free without quota throughout the year. In addition, the imports from AFTA countries are subject to a 5 percent tariff rate without any surcharge and quota.

 

Thailand's Corn Production & Supply
	2003	2004	2005
	estimate	estimate	forecast
Area harvested (in '000ha)	1,110	1,128	-
Beginning Stocks	264	176	160
Production	4,200	4,210	4,140
Total Market Year Imports	12	74	60
Oct-Sep Imports	31	60	60
Total Supply	4,476	4,460	4,360
Total Market Year Exports	650	600	250
Oct-Sep Exports	719	550	200
Feed Domestic Consumption	3,550	3,600	3,900
Total Domestic Consumption	3,650	3,700	4,000
Ending Stocks	176	160	110
Total Distribution	4,476	4,460	4,360
Market Year begins in July; except for area harvested, all figures are in '000 tonnes
Source: USDA

 

Thailand Wholesale Price of Corn
Year	2003	2004	% Change
Jan	4,750	4,910	3%
Feb	4,890	4,760	-3%
Mar	5,070	5,250	4%
Apr	5,060	6,750	33%
May	5,000	7,180	44%
Jun	4,960	7,090	43%
Jul	4,900	6,200	27%
Aug	4,950	5,030	2%
Sep	4,770	4,570	-4%
Oct	4,680	4,740	1%
Nov	4,960	5,030	1%
Dec	4,940	5,370	9%
Prices are in Baht per tonne. US$1 = 38.4 Baht.
Quote as on March 11, 2005
Source: USDA