Thai Export Strains and Weather Risks Keep Rice Market on Alert

Thai rice is entering a tense mid‑year phase: exports are down 12% year-on-year on conflict-driven losses in the Middle East, while El Niño-related weather risks and higher input costs are likely to keep global rice prices under upward pressure rather than allow a deeper correction. The market is being pulled in two directions. On one side, Thailand faces weaker demand from the Middle East and rising cultivation costs. On the other, stronger buying from Africa and Asian neighbours, persistent food security concerns and an uncertain monsoon are underpinning prices. With water storage in key Thai basins still watched closely and global trade flows being reshuffled by conflict, nearby rice values look better supported than headline export volumes might suggest.

Prices

Global benchmark quotes for Thai and Vietnamese white rice remain historically firm, with Thai 5% broken recently indicated around USD 490–500/tonne FOB, and Vietnamese 5% slightly below that range. Converted at ~0.92, this implies roughly EUR 450–460/tonne for standard Thai 5% white rice.

Against this backdrop, indicative offers for Indian and Vietnamese grades in the provided dataset show modest week-on-week easing of EUR 0.01–0.02/kg since mid-June, suggesting a mild technical correction rather than a structural downturn. For example, Indian 1121 steam has slipped from about EUR 0.66/kg to EUR 0.64/kg equivalent, and Vietnamese long white 5% from roughly EUR 0.32–0.33/kg to slightly lower, in line with softer nearby buying but still at elevated absolute levels.

Supply & Demand

Thailand’s rice exports fell 12% year-on-year in January–April 2026 to around 2.2 million tonnes, with export value near USD 1.25 billion. The main drag was the Middle East, where conflict has severely disrupted logistics and temporarily halted shipments to Iraq, traditionally Thailand’s single largest customer.

While this represents a clear loss of volume, diversification is partly cushioning the blow. Shipments to Malaysia, the Philippines, South Africa, Angola and Mozambique have increased as these countries pre-emptively secure supplies amid El Niño-linked food security concerns. At the global level, USDA now expects slightly lower rice exports in 2025/26, as disruptions to both Thai and Indian flows toward the Middle East tighten traded availability even if world production remains broadly adequate.

Fundamentals

Weather risk is moving to the forefront of the Thai balance sheet. Despite the official start of the monsoon on 15 May, May rainfall was below the 30‑year average, and usable storage in the Chao Phraya basin was reported near 36% of capacity heading into June, flagging an elevated drought risk for June–July field operations.

Recent government and meteorological updates signal the onset of an El Niño phase in mid‑2026, with rainfall projected around 10% below normal and higher temperatures increasing evapotranspiration. Although some dams have since recovered to around half of total capacity thanks to stronger late-June rains, the critical window for main-crop planting remains vulnerable to any renewed dry spell or uneven precipitation across non‑irrigated areas.

On the cost side, rising nitrogen fertilizer import prices and a 20% drop in import volumes during January–April point to tighter input availability and higher cultivation costs for Thai farmers. This will raise the breakeven level for paddy in 2026/27 and limits the scope for exporters to concede on price even as they compete more aggressively in Africa and Southeast Asia.

Weather & Risk Outlook

Short term, Thai forecasters expect the southwest monsoon to stay active, with intermittent heavy rainfall and localised flooding episodes across much of the country. However, seasonal outlooks still point to a net below-normal rainfall pattern associated with the forecast EP-type El Niño, which historically brings drier-than-average conditions to the Chao Phraya basin later in the season.

This mix of short-lived heavy showers and a structurally drier monsoon increases production uncertainty. It raises the probability of both local flooding and sub-par yield outcomes, particularly for rainfed paddies and late plantings. Markets are likely to react quickly to any confirmation of area loss or stressed vegetative conditions on satellite and ground reports.

Trading Outlook (next 2–4 weeks)

• Upside bias for Thai and Vietnamese white rice: The combination of Thai export shortfalls, weather risk and firm replacement costs suggests limited downside from current EUR levels for 5% white grades.
• Importers in Africa and Southeast Asia: Consider advancing at least part of Q3 tenders to lock in supply before any further escalation in Middle East conflict or confirmation of El Niño‑related yield losses.
• Exporters & mills in Thailand: Maintain a cautious forward selling strategy; hedge price risk where possible but retain some length to benefit from potential weather‑driven rallies.
• Buyers with flexible origin: Monitor relative spreads between India, Pakistan and Southeast Asia; temporary weakness in Indian offers may create short-lived opportunities, but logistics and policy risks remain elevated.

3‑day directional price view (EUR)

• Thai/Vietnamese 5% white, FOB: Sideways to slightly firmer; high floors from weather and freight, but limited fresh demand impulses.
• Indian parboiled and basmati, FOB: Mildly soft tone after recent easing, yet downside likely capped by strong underlying export costs and regional competition.
• Premium fragrant and specialty rice: Stable to firm, supported by resilient demand and constrained high-quality supply.