Thailand’s US$4 billion rice exports seen strained by baht rally
The crop is a key source of rural income
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[BANGKOK] Thailand’s rice exports are set to drop to a five-year low as a surge in the local currency dents the country’s competitiveness, according to a trade group, threatening incomes in a sector that employs one in four workers.
Shipments are likely to fall by about 11 per cent from a year earlier to seven million tonnes in 2026, the Thai Rice Exporters Association said on Wednesday (Feb 25). The South-east Asian nation, whose annual rice export revenue is around US$4 billion, was once the world’s top shipper but slipped to third place last year.
The baht, which has rallied more than 8 per cent over the past year to its highest level in almost five years against the US dollar, has pushed Thai rice prices above those of its rivals. The benchmark 5 per cent broken white rice is about US$20 to US$30 a tonne, more expensive than similar grades from India and Vietnam, the world’s biggest exporters, according to the association. Hom Mali, Thailand’s premium variety, sells at about US$1,110 a tonne, compared with about US$800 for Vietnam’s ST25.
A sustained price gap could see Thailand lose further market share at a time when the global rice trade is expected to expand. The crop is a key source of rural income, and the currency plays a crucial role in an economy where exports account for about 60 per cent of gross domestic product. Rice shipments from the country have struggled in recent years due to stiffer competition from lower-cost producers and volatile weather.
“The baht is overvalued,” Charoen Laothamatas, president of the association, said at a briefing. “If we are not able to accelerate exports to a sufficient level, domestic prices will face increasing pressure.”
The Bank of Thailand, which unexpectedly cut rates on Wednesday, said that it is monitoring the currency closely.
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For farmers already grappling with rising costs and household debt, weaker exports could weigh further on domestic prices and incomes. Demand from key buyers is also softening, with Indonesia halting imports and the Philippines tightening restrictions.
“In the current global economic climate, price is the most important factor for buyers,” said Charoen. Even if Thai products have better quality, a price difference of US$20 or US$30 can turn buyers away, he said. BLOOMBERG
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