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30 Oct 2023

Agriculture

Projected decline in China’s cereal imports may cause Thai cassava and rice exports to China to shrink in 2023 through to 2024 (Current Issue No.3443)

คะแนนเฉลี่ย

        China's cereal imports have declined so far during 2023 in line with its slow economic recovery, which has in turn dampened its domestic demand. Tumbling prices of agricultural commodities worldwide due to the substantially high base of 2022 and China's destocking of cereals and food crops after it accelerated such stockpiles to ensure food security during COVID-19 have pressured new purchase orders of cereals from China. As China is Thailand’s largest agricultural export market, Thailand will inevitably be affected in terms of lower cassava and rice exports to China.  
        During the rest of 2023, KResearch expects that although China may need some cereals to meet domestic requirements towards the year-end and resupply many provinces following recent inundations, its overall demand for cereals will remain weak. Moreover, the El Niño phenomenon that may partly damage Thailand’s cassava and rice production in 4Q23 will likely cause such Thai shipments to China to decline. Given this, the value of Thai cassava and rice exports to China may contract 15.0 percent and 28.5 percent, to USD2,429 million, and USD276 million, respectively in 2023.  
        Looking ahead, Thai cassava and rice exports to China will continue to face more challenges over the short to medium term because of China’s agricultural development plan that aims to gradually boost its agricultural productivity at home, particularly for soybeans and corn. As China’s domestic consumption may not grow substantially on the back of the fact its economy may take a while to recover, and its GDP may not resume growth on par with pre -COVID-19 levels, China’s imports of cereals and food crops will gradually decline, especially cassava. Thai cassava shipments to China, therefore, will be significantly affected because their share of Thailand’s agricultural exports to China is relatively high, and cassava is a major substitute for corn and soybeans for which China is accelerating  production. In 2024, it is expected that Thai cassava exports to China will contract at 4.5-8.6 percent while such impacts on Thai rice shipments to China will be limited because Thai rice exports to China are relatively low due primarily to the impacts of El Niño phenomenon on Thai rice production. As a result, Thai rice shipments to China may contract at 4.0-7.6 percent in 2024.
        To minimize the potential impacts in the future, Thai exports are advised to explore new markets with brighter prospects to replace China that Thailand is heavily dependent on, including the US, India, Saudi Arabia and Japan. Additionally, Thailand’s agricultural processing industry should focus on quality and value-added products, including organic rice and gluten-free flour, to meet demand in specific markets.

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