Thai Rice Exports Under Pressure as El Niño Risks Mount and Buyers Shift

Thailand’s rice market is entering a tighter, more uncertain phase: exports in January–April 2026 fell about 12% year-on-year to 2.2 million tonnes, mainly due to conflict-related disruption in Middle East destinations such as Iraq, while El Niño-related weather risks, low reservoirs and higher fertilizer costs threaten the new crop and keep Thai rice relatively expensive versus Indian and Vietnamese origins. Global buyers are reacting by diversifying and stockpiling. Weaker Middle East demand has been partly offset by stronger imports from Malaysia, the Philippines, South Africa, Angola and Mozambique, where authorities are building strategic stocks amid El Niño concerns. With the Thai monsoon off to a weak start and water levels in the Chao Phraya basin low, trade flows are rebalancing toward competitively priced Indian and Vietnamese rice, especially in key African markets like Nigeria.

Prices

FOB offers in India and Vietnam indicate a broadly firm but slightly softening tone for some grades, reflecting competition and recent demand shifts. In New Delhi, Indian parboiled and steam rice varieties mostly eased by about EUR 0.01/kg between late May and 20 June, with 1121 steam moving from roughly EUR 0.73/kg to EUR 0.71/kg equivalent, and 1509 steam from about EUR 0.69/kg to EUR 0.67/kg.

Vietnamese long white 5% and Japonica exports from Hanoi also show marginal declines of around EUR 0.01/kg over the same period, suggesting that alternative origins are absorbing demand displaced from Thailand at slightly lower price levels. Converted from recent USD quotes, benchmark Indian IR64 5% parboiled around USD 510/tonne FOB equates to roughly EUR 0.47–0.48/kg, undercutting many Thai grades and reinforcing India’s price advantage into West Africa and parts of Asia.

Indicative FOB export offers (20 June 2026)

Supply & Demand

Thailand exported around 2.2 million tonnes of rice in January–April 2026 with a value near USD 1.25 billion, down almost 12% from the same period a year earlier as conflict and shipping uncertainty sharply reduced flows to Iraq and other Middle East buyers. This matters because Iraq has been a core market, and any significant slowdown there has an outsized impact on Thai totals.

The demand gap is being partially filled by other regions. Importers in Africa and Asia — notably Malaysia, the Philippines, South Africa, Angola and Mozambique — have stepped up Thai purchases, driven by food security concerns and El Niño-linked supply risks. These countries are actively building stocks, which supports near-term demand, but they are also highly price-sensitive and increasingly willing to switch to cheaper Indian and Vietnamese origins when Thai offers are not competitive.

In West Africa, especially Nigeria, this shift is already visible as Indian parboiled has gained share thanks to more attractive pricing compared with Thai rice. Pakistan and Vietnam are also positioning to capture incremental demand, as shown by competitive FOB offers from Karachi and Hanoi over recent days, giving buyers multiple alternatives if Thai export availability tightens further.

Fundamentals & Weather

On the supply side, Thailand’s domestic situation is becoming more fragile. Although the monsoon officially began on 15 May, May rainfall was below the 30-year average and water storage in the key Chao Phraya basin is only around one-third of capacity. Thai authorities and climate agencies now highlight a high probability that El Niño conditions will develop or strengthen through mid-2026, implying below-normal, erratic rainfall and a risk of prolonged dry spells into July.

This raises concerns about planted area and yield potential for both main and off-season crops. Lower reservoir levels could force tighter irrigation management just as paddy requires steady water, increasing the chance of yield losses if rains fail to recover in June–August. A Thailand-focused hydrological risk assessment for the emerging 2026–27 El Niño underscores that the early monsoon window is crucial for planning and that the main agricultural stress could extend into the 2027 dry season if deficits accumulate.

Input costs add another layer of pressure: nitrogen fertilizer imports into Thailand fell by about 20% in January–April while becoming more expensive, squeezing farmer margins. If weather prospects do not improve soon, some growers may delay or reduce planting, structurally tightening Thai exportable surplus. At the global level, the World Bank and regional climate centers warn that an 80–90% probability of El Niño persisting into late 2026 raises systemic risks to Asian and African rice production, supporting a bullish longer-term floor for prices even if short-term quotes fluctuate.

Trade Flows & Competition

The combination of weaker Thai exports and firm stock-building demand is accelerating a reconfiguration of global trade flows. India, Vietnam and Pakistan are the main beneficiaries, using competitive pricing and ample stocks to capture market share previously held by Thailand in Africa and parts of Asia. In Nigeria and some Southern African markets, Indian parboiled shipments are already displacing Thai rice due to a meaningful price discount.

Red Sea and Middle East shipping risks add to Thai exporters’ challenges by increasing freight and insurance costs on longer routes, further eroding competitiveness into the Mediterranean and West Africa. If Thailand’s exportable volumes tighten because of weather and high input costs, the price spread between Thai and Indian/Vietnamese rice is likely to widen, especially for parboiled and 5% broken grades where substitution is easiest.

Outlook & Trading Guidance

Over the coming months, the Thai rice outlook will be shaped by four main variables: monsoon recovery and irrigation availability, stabilization of Middle East trade routes, fertilizer and other input costs, and the intensity and duration of El Niño. If rains improve and water levels recover, Thailand could stabilize exports later in 2026, though it is unlikely to fully regain lost Middle East volumes quickly. If drought concerns deepen, Thai rice is likely to remain relatively expensive, encouraging further demand rotation toward India and Vietnam.

Trading outlook – key pointers

• Importers in Africa and Asia: Continue to diversify origin mix, maintaining a core base in Indian and Vietnamese supplies while using Thai rice selectively for quality-sensitive segments; lock in part of 2026Q3–Q4 needs on price dips given El Niño risk.
• Middle East buyers: Monitor freight and conflict-related insurance closely; consider flexible tender structures that allow origin substitution if Thai shipments remain constrained.
• Thai exporters and millers: Prioritize high-margin destinations and quality-differentiated products; hedge against potential further input cost increases and currency shifts; engage in forward sales cautiously until clearer rainfall signals emerge.
• Speculative participants: Bias moderately bullish on medium-term prices given El Niño and tightening Thai fundamentals, but expect near-term volatility as Indian and Vietnamese competition caps rallies.

3-day price and directional indication (EUR)

• India FOB (New Delhi, parboiled/steam grades): Stable to slightly firm around EUR 0.34–0.72/kg as lower previous offers meet steady export demand.
• Vietnam FOB (Hanoi, long white & Japonica): Mostly steady near EUR 0.35–0.47/kg; modest downside limited by incremental African and Asian demand.
• Thai export market (implied): Premium to Indian and Vietnamese rice expected to persist or widen, with a mildly upward bias if monsoon rainfall in central Thailand disappoints in the coming days.