August 7, 2007

Reduced acreage forecast lower estimates for 2007/08 Thailand corn output

Estimated corn production in Thailand is revised downward due to continued acreage reduction. Corn imports should increase slightly due to a recovery in domestic feed demand, which will also limit exportable supplies, according to a US Department of Agriculture attache report posted Monday (August 6) on the Foreign Agricultural Services Web site.

For rice, main-crop rice cultivation started with a favourable monsoon season. The intervention program will likely continue in MY (marketing year) 2007/08 with intervention prices close to market prices, and will focus on improvement of storage facilities.

MY 2007/08 corn production is expected to increase slightly to 3.85 million tonnes, down one percent from the previous forecast, due to a reduction in planted areas. The acreage expansion in the north was offset by a continued contraction of planted areas in the northeast and central, which accounts for around 40 percent of total planted areas. Despite a 7-8 baht per kilogramme (kg) increase in corn farm-gate prices, which have reached a record high of US$212 per tonne, cultivated areas declined as returns from alternative crops - cassava in particular - remain relatively higher than those from corn. However, average yield of corn in MY 2007/08 will likely be higher than the previous year due to favourable rainfall.

Corn imports will continue to increase significantly, particularly from Laos under the Joint Economic Cooperation Strategy Program, or Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS), which is an economic cooperation agreement between Burma, Laos, Cambodia, Vietnam, and Thailand. Imports of corn from these countries enjoy duty-free privilege. Also, many Thai corn traders reportedly had contract farming of around 300,000 rai (48,000 hectares) in Laos in MY2006/07. Planted areas are expected to increase significantly in MY 2007/08. Laotian corn is normally imported into Thailand between October - March. In MY 2006/07 corn imports from Laos is estimated at around 350,000 - 400,000 tonnes. Around 60-70 percent of imported corn from Laos is distributed locally to domestic medium and small-scale feed mills. The rest goes for re-export, particularly to Vietnam and Indonesia.

MY 2007/08 corn exports are expected to decline from the previous year as domestic demand for feed, particularly in poultry, is anticipated to increase. Poultry production, representing around half of total feed corn consumption, will likely reach 18-20 million birds per week due to current stronger than expected export demand for cooked chicken meat. In addition, corn export prices are expected to be less attractive than domestic, as export prices are expected to remain flat as world exportable supplies remain at the previous year's level.