During 8M09, Thai rice exports showed a 29.5 percent contraction YoY to total only USD3.281 billion due primarily to intense competition from Vietnam. Vietnamese rice varieties have beaten Thai counterparts, especially white rice thanks to their cheaper price, averaging only USD130-140 per ton lower than Thai grain. Our exports of parboiled rice also shrunk given that importers, especially African countries, have held back from further orders while waiting for cheaper Indian grain to enter the market, because it is around USD60 per ton cheaper than Thai counterparts.
However, since the Indian government announced in early September 2009 that they would continue to ban exports of non-basmati varieties, African importers have shifted to Thai parboiled rice instead. Our rice is expected to become more competitive versus Vietnamese grains since the Thai government's crop pledging program has been replaced by the price guarantee program. Therefore, Thai exports will likely pick up over the remainder of this year into mid-2010, with parboiled rice showing better export performance than white rice. Our exports of sticky rice to China are also expected to show a more promising trend.
Bright prospects are also ahead for our rice shipments to African markets, thanks to the windfall of India banning their own exports of white rice (non-basmati) over the same period. However, caution should be exercised in regard to rivalry from Vietnam that has lately shifted to marketing in Africa, as well.
In addition to this, a record fall in India rice production has led to high prices for their exported basmati rice. This will be an opportunity for Thailand to export Hom Mali rice to the African market. Rice bran exported to India will likely increase, too. Furthermore, Thai exporters will have an opportunity to expand rice bran exports with no competitors because Vietnam's exports of rice bran are typically very low.
The African rice market looks quite promising. Even so, success will lie in studying consumer behavior and preferences in each country. In 2010, the Shanghai Expo in May and Asian Games in November to be held in China and the Chinese Tourism Year in 2010 (announced by the Chinese government) will also be positive to our rice exports.
One worrisome factor toward parboiled rice market expansion will be accelerating parboiled rice production capacities that might cause market surpluses, especially if India resumes parboiled rice exports in mid-2010. Vietnam and China have already resumed expanded parboiled rice production. All parboiled rice production depends on export viability, while exports to the EU have increased moderately. In addition, a new US rice variety, ;Jazzman”, developed to compete with our Hom Mali rice, needs to be watched.
The US Jazzman rice variety is currently undergoing research and development at low production levels, not yet being sent into the market. However, what Thai exporters of our Hom Mali have to consider is grain integrity, fragrance, quality and texture when cooked. To evaluate future competition, selling prices should be considered as well. Due to its high yield per unit of land cultivated, the Jazzman variety's selling price will likely be lower than that of our Hom Mali rice, and thus may affect our competitiveness in the future.