Thai Rice Exports Under Pressure as Weather and Middle East Tensions Bite

Thai rice exports are losing momentum amid reduced Middle Eastern demand, logistical disruptions and weather risks, while Indian and Vietnamese competition keeps a tight lid on global price upside. The market is highly sensitive to monsoon performance and freight conditions, with buyers selectively shifting to alternative origins. The global rice complex is entering mid-2026 with a mixed tone: Thailand’s export volumes are down, but regional demand in Asia and Africa and El Niño-related stockpiling are underpinning trade flows. Indian and Vietnamese FOB offers have softened slightly in recent weeks, yet remain elevated in historical terms, limiting major downside for competing Thai grades. With Thai reservoirs low and fertiliser costs high, production risks are skewed to the downside, keeping a weather premium in prices despite weaker shipments.

Prices & Spreads

Indian and Vietnamese FOB quotations indicate a broadly stable to slightly softer price environment in early July, even as Thai exports slow. Indicative Indian rice export offers converted to EUR, based on recent market levels and current FX, suggest:

Recent Vietnamese 5% broken export indications around USD 410–415/tonne (roughly 0.37–0.38 EUR/kg) and stable fragrant offers suggest global benchmark prices have eased from earlier highs but remain firm due to El Niño concerns and active Asian demand. 

Supply, Demand & Trade Flows

Thailand exported about 2.2 million tonnes of rice in January–April 2026, a 12% year-on-year decline, with export value near USD 1.25 billion. The drop is concentrated in Middle Eastern markets, notably Iraq, where regional conflict and the Strait of Hormuz crisis have disrupted logistics and dampened commercial activity. 

Weaker Middle Eastern buying has been partly offset by stronger imports from Malaysia, the Philippines, South Africa, Angola and Mozambique, many of which are building strategic stocks on food-security concerns linked to El Niño. At the same time, competitive pressure from lower-priced Indian rice remains intense in price-sensitive destinations, reinforcing buyers’ willingness to diversify away from Thailand where freight or political risks are higher.

Vietnam, by contrast, has increased first-half 2026 exports by around mid-single digits year-on-year, aided by aggressive pricing and strong demand from China and African buyers.  This shift in trade flows is tightening the competition for Thailand in its traditional white-rice markets, even as some importers still prioritise Thai quality and reliability.

Fundamentals & Weather

Underlying Thai fundamentals are becoming more constructive for prices. The monsoon season officially started on 15 May, but May rainfall lagged the 30-year average, and water storage in the key Chao Phraya basin is only about one-third of capacity. This elevates the risk of moisture stress during June–July vegetative stages and raises the probability of yield losses if rains do not normalise in the coming weeks. 

At the same time, Thai growers face rising input costs. Nitrogen fertiliser imports became more expensive and volumes fell about 20% in January–April, squeezing margins and potentially discouraging input use. Together with weaker export demand and uncertainty over shipping, this cost squeeze increases the market’s sensitivity to any further weather or logistical shock.

Short-term weather outlooks for central Thailand point to continued scattered showers but no immediate, basin-wide rainfall surge, implying reservoir recovery is likely to be gradual at best. Should the monsoon underperform through July, markets may start to price in a smaller main-crop harvest, tightening Thai exportable supplies into late 2026.

Market Outlook & Trading Ideas

Thailand’s ability to regain export momentum in the second half of 2026 hinges on three conditions: improved rainfall and reservoir levels, stabilisation of shipping routes through the Middle East, and renewed demand from traditional buyers such as Iraq and other Gulf states. Absent a clear improvement, Thai exporters will increasingly lean on Asian and African markets, while facing ongoing competition from lower-priced Indian and Vietnamese rice.

Given these cross-currents, the near-term price bias for Asian export origins is mildly upward but capped. Weather and logistics risks justify a modest risk premium for Thai grades, whereas ample Indian supplies and firm Vietnamese shipments limit the scope for a sharp rally. 

Indicative Trading Recommendations

• Importers in the Middle East and Africa: Use current price consolidation to secure Q4 2026 coverage, prioritising diversification between Thai, Indian and Vietnamese origins to manage geopolitical and weather risk.
• Thai exporters: Hedge downside volume risk but retain some upside price exposure, as any monsoon shortfall or renewed logistical disruption could quickly tighten Thai supplies and lift premiums.
• Industrial buyers in Asia: Consider staggered purchasing and optionality between fragrant and non-fragrant grades, given that fragrant premiums may widen further if Thai quality supplies tighten.

3-Day Directional Price View (EUR, FOB)

• Thailand 5% white (reference): Neutral to slightly firmer; weather and freight risks offset softer demand signals.
• India non-basmati (PR11/IR64 equivalents): Mostly stable; competition in Africa and Asia keeps offers disciplined.
• Vietnam 5% white: Slight downside risk if export flows remain strong and importers show brief buying fatigue, but El Niño concerns still provide support.