Thai 5% white rice prices hit two-month high amid short covering, weather constraints

Thai 5% white rice prices have hit a two-month high amid short covering, active nearby shipment demand and weather-related supply constraints.

Platts, part of S&P Global Energy, assessed the price of Thai 5% WR rice at $475/metric ton FOB on Sept. 3, up $9/mt on the week. The last time the price was higher was on June 29, when it was assessed at $479/mt FOB.

Market sources said the rally could face resistance if exporter buying slows, but tighter water availability, weather-related milling constraints and continued nearby shipment activity could keep prices firm in the near term.

Wanniwat Kitireanglarp, deputy secretary general of the Thai Rice Exporters Association, said water supply is tighter than last year heading into the final stretch of the wet season.

"Nationwide reservoir storage at major reservoirs stood at 68% of capacity as of Sept. 2 compared with 71% at the same point last year. Usable water nationwide is at 53% of capacity, compared with 57% last year. The four major dams in the Chao Phraya basin — Bhumibol, Sirikit, Kwae Noi and Pasak Jolasid — had combined usable water of only 48%, versus 67% a year earlier," he said.

He added that cumulative rainfall nationwide was also running about 9% below the long-term average, while tighter water availability could have implications for Thailand's upcoming 2026/27 dry-season paddy crop. Lower reservoir levels could result in more limited irrigation allocations and constrain second-crop planting area compared with last year.

On export demand, he said the sharp decline in Iraq's purchases largely reflects changes in trade routes rather than weaker underlying demand, with some shipments rerouted overland through Turkey and Jordan amid disruptions to the Hormuz sea route.

Kitireanglarp said Asia is also contributing additional demand, with the Philippines and Malaysia among the markets being watched by Thai exporters.

On input costs, he added that fertilizer prices remain elevated following the war-related price shock. Although prices have pulled back from their peaks, they remain well above pre-crisis levels. Higher input costs have prompted some farmers to reduce fertilizer application, which could weigh on yield potential.

The tighter water outlook comes as exporters continue to buy rice for nearby shipments, while rainy conditions are affecting the milling process and supporting production costs.

Anurak Deesirisathien, Sales Head of Asia Golden Rice Co., Ltd., said, "Short covering is one of the main factors supporting the market at the moment. At the same time, harvesting during the rainy period is affecting milling yields, particularly whole-grain recovery. This is pushing up both paddy prices and the cost of producing 5% broken rice. The current crop should largely finish by September. If these conditions continue through the month, I expect prices to remain firm at relatively high levels rather than ease quickly after the short covering is completed."

Thai 5% broken white rice local prices increased by 90-100 baht per 100 kg on the month, according to the Thai Rice Millers Association.

While Anurak pointed to short covering and weather-related milling constraints as key sources of support, a Bangkok-based seller said the recent rise could lose momentum if exporter buying slows.

"The paddy price has increased as supply is hindered by rainy weather. The millers also have full hands due to continuous buying by the exporters. But demand is becoming limited. Malaysian has stopped buying from Thailand. The millers are still trying to raise the price. But there is no shortage as harvest will continue into October. If the exporters stop buying, there is no reason for the price to continue to rise," the seller said.