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Thailand in tight race with Vietnam to be 2021's second-largest global rice exporter

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Platts Dirty Tankerwire

Thailand in tight race with Vietnam to be 2021's second-largest global rice exporter

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Thailand's rice export rebound continues in October

Vietnam remains out in front, set to hang on to second place

Exports boosted by return of West African, Iranian, Iraqi, Chinese demand

Thailand's monthly rice exports grew for a fifth consecutive month in October, putting the country within striking distance of reclaiming its title as the world's second largest rice exporter in 2021.

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According to data from the country's Ministry of Commerce, October exports totaled 773,823 mt, up by 74% on the year and the highest monthly total since January 2019. That brings Thai exports in January-October 2021 to 4.59 million mt, marginally higher than this time last year.

No country will challenge India's pre-eminent status at the world's largest rice exporter, with January-September exports totaling 16.3 million mt and the country on course to represent around two-fifths of global rice exports in 2021. As in 2020, the only country which stands in Thailand's way to the title of second largest exporter is Vietnam.

According to Vietnam Customs, the country's January-October exports are still around 592,000 mt ahead of Thailand's, despite the country's strict regional lockdown during August-September. While it would generally be safe to assume that Vietnam will retain its position as second largest exporter in 2021, Thailand has witnessed a staggering growth in exports in recent months. Exports reached an extraordinary monthly low of 302,669 mt in March, but have since increased by over 150% to reach October's level.

Additionally, sources have consistently reported in recent days that the government of Vietnam's largest buyer, the Philippines, has been restricting buyers' access to phytosanitary licenses which they need to import. While late in the year, this could still prove an impediment to December exports from Ho Chi Minh City.

The principal reason for Thailand's resurgence as a major exporter in recent months has been its return to price competitiveness. Thai 5% broken white rice was assessed by S&P Global Platts at as high as a $137/mt premium to its Indian equivalent in February this year, but a collapse in Thai pricing following improved output meant that both products were almost neck-and-neck for much of July-October.

While a $20-$30/mt premium for Thai white rice has emerged in recent weeks, many buyers are still willing to pay this due to the perceived premium quality of Thai rice and the typically more favorable reputation of its exporters with regards to execution. Prices of Hom Mali and Pathumthani Fragrant varieties have also declined substantially in recent months, further supporting demand for Thai rice.

As a result, many price-conscious West African buyers have returned to Thailand for Fragrant, white and parboiled rice. While remaining largely absent from the Thai market earlier in the year – no West African countries featured as a top 10 export destination in May or June – Benin and Cote d'Ivoire were Thailand's top two export destinations in October.

Unusual demand has also aided Thai exports in recent months. Iraq's return to the Thai market following a seven-year hiatus is the most remarkable development, with the country taking 180,885 mt of Thai rice in 2021, according to the Ministry of Commerce data. The principal reason for the uptick in demand is that Iraq's government divested rice sourcing responsibilities to a company called Al-Owais earlier this year, which was much more open to non-Americas rice origins.

Additionally, neighboring Iran has been in the market in recent weeks for large volumes of Thai white rice, which are expected to be shipped in December and January. While sources typically agree that a deal has been done for at least 60,000 mt, some sources believe that the final confirmed volume could be more than double this if buyers can secure the required financing.

The world's largest rice buyer, China, has also been on a buying spree. From January-September, imports totaled 3.58 million mt, more than double the 1.68 million mt imported over the same period in 2020, according to the country's customs data. This does not exclude Thailand, with Thai exports to China so far this year roughly double that of last year, making China Thailand's third largest export market.

While Thailand also faces exporting hurdles at the end of the year – especially a lack of containers – it appears that even if the country does not reclaim its title as the world's second largest rice exporter from Vietnam, it will likely be very close.