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Market Reports


April 13, 2012

 

Thailand to increase animal feed use on strong livestock market

 
 

An increase in corn consumption which is the main raw material in feed meal as well as an increased in the use of animal feed were the results of a strong livestock market this year, the Bangkok Post reports.

 

Local supplies are tight and the world market price of corn is high, driving Thai traders to export the grain. This is contributing to the shortage of corn, especially at small feed mills. To alleviate the shortages, the cabinet on April 11 approved a proposal from the Commerce Ministry to import 30,000 tonnes of corn from Laos to supply small feed mills.

 

The Public Warehouse Organisation (PWO) has been authorised to import the corn from now to the end of May. The local corn harvesting season begins in July. The Bank for Agriculture and Agricultural Cooperatives will lend the PWO THB337 million (US$11 million) to pay for the corn, priced at about THB7-7.50 (US$0.23-0.24) a kilogramme. About THB300 million (US$9.75 million) will be for the corn and the rest will cover operating costs.

 

Thailand's corn production is estimated at 4.78 million tonnes this year, while domestic demand is 4.525 million tonnes. Exports are projected at 190,000 tonnes.

 

Parkdehans Himathongkorn, deputy government spokesman, said that rising corn prices have caused suffering among small feed mill operators and that the hike in feed prices could result in higher meat prices eventually. The cost of corn rose to THB10.50 (US$0.34) a kilogramme in March, from THB10 (US$0.32) the month before. But the price in Laos is much lower.

 

According to Parkdehans, the corn will be imported at a 0% Asean Free Trade Area tariff rate. Last year, Thailand bought about 387,400 tonnes of corn from Laos and Cambodia. The Thai Feed Mill Association said that the consumption of animal feed is expected to increase sharply this year as a result of very robust livestock production.

 

It is estimated that the local livestock industry will use about 15.22 million tonnes of feed meal this year to feed about 1,160 million chickens, 600,000 tonnes of shrimp, 350,000 head of cattle, and 2.2 million pigs. An association source said that many feed mills are reluctant to import grain because of high prices.

 

"We're not certain about the quality of corn from neighbouring countries. Considering the low price of THB7 (US$0.23), the government will have to inspect the grain," the source said.

 

The source was surprised that the government still allow traders to export corn despite high demand in the domestic market. He added that animal feed manufacturers can substitute broken rice for corn, which is more expensive.

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