Thai Rice Exports Under Pressure as Weather Risks Increase

Thai rice faces a challenging mid-2026 as exports fell 12% year-on-year in January–April, led by a sharp slowdown in Middle Eastern demand and logistics disruptions, while domestic production is threatened by below-normal rainfall and high input costs. Global rice prices remain firm to slightly higher, with Vietnam and India providing competitive alternatives, but Thailand’s weather and cost profile point to a tighter supply outlook later in the year if the monsoon does not normalise and if demand from traditional buyers recovers.

Prices

Recent FOB offers in India and Vietnam show a broadly firm but not spiking market, with mild week-on-week softening in some segments:

• India, New Delhi FOB: non-organic long-grain steam types such as PR11, 1509 steam and 1121 steam are trading around EUR 0.33–0.70/kg, down roughly EUR 0.01/kg over the second half of June but broadly stable into early July.
• Premium organic basmati from India is quoted around EUR 1.60/kg, and organic non-basmati about EUR 1.30/kg, also easing marginally by around 1–2% over the last three weeks.
• Vietnam, Hanoi FOB: long white 5% broken, Japonica and fragrant types mostly range between EUR 0.34–0.50/kg, with prices edging down by about EUR 0.01/kg from mid- to late June, while specialty types (black, paper-dried) command significantly higher levels.
• On the broader export market, Vietnam’s 5% broken benchmark is indicated around USD 410–415/t (roughly EUR 0.37–0.38/kg), slightly up on the month as El Niño and weather concerns support values.

Supply & Demand

Thailand’s export performance in early 2026 confirms a notable demand shock. Shipments reached about 2.2 million tonnes in January–April, around 12% below the same period last year, mainly because Iraq and several neighbouring Middle Eastern buyers sharply reduced purchases amid regional conflict and trade route disruptions.

Trade sources indicate that while Southeast Asian and African markets have increased offtake, this has not fully compensated for the Middle Eastern shortfall. Competition from India and Vietnam remains intense, with India still the largest global exporter and Vietnam’s first-half exports estimated around 5 million tonnes, up nearly 6% year-on-year.

On the import side, several key Asian buyers (e.g. the Philippines, Malaysia) continue to rely heavily on Thailand and Vietnam, but are opportunistically diversifying into Indian or Pakistani origins when price spreads widen. This keeps a lid on Thai price premiums, even as Thai exportable supplies risk tightening later in the season if yields disappoint.

Fundamentals

Thai domestic fundamentals are increasingly weather-driven. Despite the official onset of the 2026 monsoon, cumulative rainfall has so far trended below historical averages, with national forecasts calling for about 10% less rain than normal for the rainy season. Water storage in key agricultural reservoirs remains below optimal levels, heightening concerns about irrigation availability for main-crop and off-season rice.

At the same time, farmers are facing elevated fertilizer and input prices, which compress margins and may discourage aggressive planting for the next crop cycle. These cost pressures, combined with water risks, raise the probability of a more conservative supply response later in 2026 and into 2027, particularly if monsoon performance does not improve in July–August.

In parallel, lower Thai exports are not yet creating a severe global deficit because India and Vietnam still supply sizeable volumes. However, both countries are also operating under weather and policy uncertainty (below-normal monsoon risk in India and El Niño concerns across Asia), which could quickly tighten the global balance if multiple origins underperform at once.

Weather Outlook (Key Rice Regions)

• Thailand: The seven-day outlook points to scattered showers with some heavy bursts but overall decreasing rainfall in central and eastern regions, reinforcing the below-normal seasonal pattern and keeping irrigation concerns in focus.
• India: Recent data highlight cumulative southwest monsoon rainfall still significantly below normal across much of the country, and reservoir levels dipping from above- to slightly below-average, underscoring ongoing production risk if the precipitation deficit persists.
• Vietnam: Market commentary increasingly references El Niño risk, which could curb yields later in the year and has already helped lift export quotations for 5% broken rice.

Market & Trading Outlook

For the remainder of 2026, the Thai rice market hinges on two main variables: weather normalisation and the pace of demand recovery from core Middle Eastern buyers. If monsoon rains remain below-normal and irrigation stays constrained while Iraq and neighbouring markets return to the spot market, Thai export availability could tighten and support a firmer price structure versus current levels.

Conversely, if demand from the Middle East remains subdued and competing origins maintain ample exportable surpluses, price gains may be capped and Thai exporters will likely compete more on quality differentiation and logistics reliability than on outright price.

Strategic Pointers for Market Participants

• Importers: Consider forward-covering a portion of Q4 2026 and Q1 2027 needs, especially for Thai and Vietnamese fragrant grades, while prices are still only modestly above recent ranges and before weather risks are fully priced in.
• Exporters in Thailand: Prioritise high-value and specialty segments where buyers are less price-sensitive, and hedge exposure to potential freight or war-risk premium increases on Middle Eastern routes.
• Buyers in the Middle East & Africa: Maintain origin diversification across Thailand, India and Vietnam to manage geopolitical and logistical risks, and monitor monsoon developments closely for timing larger tenders.
• Producers: Reassess input use and planting decisions for the next cycle with conservative yield assumptions, given both water uncertainty and still-high fertilizer costs.

3-Day Directional Price Indication (EUR-based)

• India FOB (New Delhi): Sideways to slightly firm; recent small declines seem to have stabilised, but any further monsoon disappointment could nudge prices modestly higher.
• Vietnam FOB (Hanoi): Mild upward bias, particularly for 5% broken and fragrant varieties, as El Niño-related concerns persist and export demand remains solid.
• Thai benchmarks (implied): Stable to marginally firmer, with upside risk if Middle Eastern buying resumes more strongly or if rainfall stays below expectations through July.