Thai corn prices drop in thin trade as supply rises

 

 

Corn prices in Thailand, one of Asia's top three exporters, have declined due to increasing supply and are likely to drop further over the next few months, with buyers staying away for now, traders and exporters said on Thursday (July 9).

 

Domestic corn prices have fallen to 6.30 baht (US$0.185) per kg, down from last month's 7.50 baht and well below the 8.50 baht per kg the government paid to farmers during an intervention scheme that expired at the end of March.

 

One trader said that "neither feedstuff producers nor corn exporters are in any rush to buy as they have stocks and they know that supply is increasing."

 

Feedstuff producers are believed to have 1.5 million tonnes of corn in their stocks, while around 500,000 tonnes are estimated to be held by corn exporters, traders said.

 

Farmers in some parts of central Thailand have began harvesting and production is expected to peak in September, when around 4 million tonnes of corn will come onto the market.

 

Thailand is expected to produce around 4.2 million tonnes of corn in the 2009-10 crop (July/February), according to the Agriculture Ministry.

 

Traders said demand for exports had declined as buyers were well stocked, and some traders were reluctant to buy at the moment as they expected prices to drop further.

 

Huge government stocks have added to the downward pressure on prices, they said.

 

The government is estimated to hold up to 1 million tonnes of corn bought from farmers under the latest intervention scheme from October 2008 to March 2009.

 

It has failed to release the corn due to disagreements over selling prices between ministers.

 

Even so, traders said they expected the government to step in again to buy corn from farmers and add to its stocks, because it needed to beef up its popularity among poor farmers.

 

According to one exporter, this "would signal that the government will have to hold bigger stocks, which could depress prices again."

 

US$1=THB34.07 (July 10, 2009)