November 06, 2008


Thailand's corn production high but exports at risk


Marketing year (MY) 2008/09 corn production is marginally affected by flooding. Corn production should seemingly remain higher than the previous year due to better-than-expected yields.


Anticipated yield improvements for off-season crops are expected to overcome flood damage. MY 2008/09 off-season corn production is forecasted to increase significantly following acreage expansion and yield improvements.


Current corn prices have fallen by 25 percent from record 9-10baht/kg (US$284 / tonne) in July 2008. As a result, the Government will implement a corn intervention programme to stabilize domestic corn prices from November 1 - February 28, 2009.


Intervention prices are set at 8.50 baht/kg. Farmers will be able to redeem their corn within 90 days under a 3 percent interest rate. The Government also suspended the preferential treatment received by corn from neighboring countries (Lao, Cambodia and Burma) under the Joint Economic Cooperation Strategy Programme or Ayeyawady-Chao Praya-Mekong Economic Cooperation Strategy (ACMECS).


ACMECS is an economic cooperation agreement between Burma, Laos, Cambodia, Vietnam and Thailand which allowed unlimited amount of corn to enter Thailand from neighboring countries at a zero percent tariff.


MY 2008/09 feed corn consumption will likely remain stable in line with swine and poultry production. Despite the anticipated global economic recession, poultry product exports are expected to continue escalating over to Europe and Japan, particularly for frozen chicken meat, stimulated by the food safety concerns on Chinese food products.


MY 2008/09 corn exports are revised downward but still higher than the previous year. Corn export growth will likely slow down in anticipation of strong competition from relatively cheaper Indian and Brazil corn.


The relaxation of India's corn export ban since October 2008 has slowed Thai corn exports prospects in Malaysia and Indonesia which accounts for 50 - 60 percent of total corn exports. Indian corn export prices are currently US$10 - US$15 / tonne cheaper than Thai corn. The import ban on corn from ACMECS countries will likely limit Thai corn exportable supplies, but only during the cessation of the agreement, November -  December 2008.
Table 2: Thailand's Production, Supply and Demand for Corn
For the full USDA report, please click here