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28 Aug 2019

Agriculture

Supply shortage pushes glutinous rice prices up and it is expected to increase expenditures on food by 2.3-3.2% (Current Issue No.3027)

        Domestic prices of glutinous rice rose sharply due to a supply shortage of glutinous paddy during the main crop season 2018/2019 as farmers shifted to grow more Hom Mali fragrant rice. Therefore, the main-crop glutinous rice output fell 1.18 percent YoY. Moreover, the widespread drought, resulting in lower production of off-season rice crop, caused a drop in glutinous paddy yield by 9.2 percent YoY.    Consequently, the overall glutinous paddy output in 2018/2019 crop year decreased to 6.45 million tons, which is the lowest in three years and attributed to a steady increase in glutinous paddy prices.

     KResearch projects that prices of sticky rice will continue to increase for at least two months during the changing crop season before they begin to cool down from late October to December 2019.  This is because rice output will increase as the 2019/2020 harvest season is approaching. Moreover, a recent rise in glutinous paddy prices may encourage farmers to raise the supply of glutinous paddy versus the base in the previous year under the condition that there is sufficient water supply for cultivation. In 4Q19, the total of 5.12 million tons of glutinous paddy output are expected to enter the market and the new yield will likely lower prices of glutinous paddy to THB11,900 per ton on average.

       KResearch posits that the acceleration of glutinous paddy prices to rise over 20 percent YoY in August-September 2019 will affect prices of foods using glutinous rice as an ingredient or component. During the said period, household expenditures on food may increase 2.3-3.2 percent per month, pushing the headline inflation to increase approximately 0.1 percent.



Agriculture