Thai Rice Under Pressure as Export Flows Slow and Weather Risks Grow

Thailand’s rice sector is moving into mid‑2026 on a weaker footing: exports in January–April fell 12% year-on-year to about 2.2 million tonnes, while domestic weather and input costs are tightening margins. Global buyers are watching Thai monsoon developments closely as they reassess origin choices between Thailand, India and Vietnam. After a strong 2025, Thailand’s export engine has cooled as Middle Eastern demand, notably from Iraq, has softened and freight disruptions complicate shipments. Some of the volume has been diverted to African and Asian buyers (Malaysia, the Philippines, South Africa, Angola, Mozambique), where food security concerns and El Niño worries support import demand. At the same time, sub‑average May rainfall and low reservoir levels in the Chao Phraya basin underline production risk just as fertiliser costs rise. For now, Indian and Vietnamese FOB offers remain broadly stable, but the market’s next direction hinges on rainfall recovery in June–July and any renewed Middle East buying.

Prices

Indicative Indian and Vietnamese FOB values in late June show a broadly stable but firm rice market, despite Thailand’s export slowdown.

Converted at an indicative rate of 1 EUR ≈ 1.07 USD, Vietnam’s 5% broken offers around 405–415 USD/t translate to roughly 0.34–0.36 EUR/kg, consistent with the quoted Hanoi FOB levels. The stability in Indian and Vietnamese prices, alongside Thailand’s weaker export volumes, suggests buyers currently have sufficient alternative origin options, which caps any sharp upside in global benchmarks.

Supply & Demand

Thailand’s exports in January–April 2026 fell 12% year-on-year to around 2.2 million tonnes, worth about 1.25 billion USD, as shipments to the Middle East—particularly Iraq—were disrupted and demand softened. Stronger buying from Africa and Asia only partly compensated, leaving overall Thai export flows on a downward trend.

The demand shift is notable: while Thailand loses share in some traditional Middle Eastern markets, African and Southeast Asian importers are stepping up purchases, driven in part by food security concerns linked to El Niño and fears of weather-related supply shocks later in the year. This pattern mirrors broader global trade, where India and Vietnam continue to dominate volumes, with India alone accounting for roughly 40% of global rice exports according to recent international outlooks.

For now, import demand from Malaysia, the Philippines, South Africa, Angola and Mozambique supports Thai fragrant and white rice categories, but is insufficient to fully offset Middle East weakness. If El Niño-related risks materialise more strongly in the second half of 2026, these buyers may seek to secure additional tonnage early, which would tighten availabilities and add upward pressure to premiums for reliable origins.

Fundamentals & Weather

Domestic fundamentals in Thailand are turning more challenging. Although the 2026 monsoon officially started on 15 May, rainfall during May remained below the 30‑year average, and major reservoirs in the Chao Phraya basin were reported at only around one‑third of capacity, indicating elevated drought risk for June–July rice plantings and early growth. Subsequent forecasts from the Thai Meteorological Department in June point to episodes of heavier rain and even local flood risk, suggesting highly uneven rainfall distribution rather than a smooth recovery.

At the same time, Thailand faces rising production costs. Nitrogen fertiliser import volumes fell by about 20% in January–April, while import prices increased, signalling tighter input supply and higher on‑farm costs. This combination of weather uncertainty and more expensive fertiliser is likely to squeeze margins, particularly for irrigated dry‑season and high‑input fragrant rice systems, and could limit the area response even if prices strengthen later in the season.

Global fundamentals are more comfortable but not ample. Recent international outlooks still project relatively solid global rice supplies for 2026, underpinned by large exportable surpluses in India and steady production in Vietnam. However, Thailand’s vulnerability to El Niño, plus ongoing geopolitical and freight disruptions affecting Red Sea and Middle East routes, mean that available supplies at consumer destinations could tighten quickly should weather or logistics deteriorate further.

Short-Term Outlook & Trading Ideas

With Thai export flows soft and Indian/Vietnamese FOB offers steady, the global rice market in early Q3 2026 looks balanced but fragile. The key variable over the next 4–8 weeks will be rainfall performance over Thailand’s central and northeastern rice belts and how quickly Middle Eastern demand normalises.

• Risk bias: Tilted mildly bullish for Q3 as Thai production risk and persistent El Niño probabilities could erode exportable surplus if June–July rains disappoint.
• Importers: Consider locking in part of Q4 2026 and early‑2027 coverage on current flat FOB values from India and Vietnam, while keeping flexibility to switch origins if Thai weather improves and offers become more competitive.
• Exporters in Thailand: Focus on premium and food‑security‑driven markets (Africa, Southeast Asia) where demand is firm and less price‑sensitive, and hedge against baht strength and freight cost spikes.
• Producers in Thailand: Prioritise water‑secure areas and efficient input use, and explore forward pricing or contracts where available to manage fertiliser‑driven cost inflation.

3‑Day Directional View (key export hubs, in EUR terms)

• Thailand (export offers, all grades): Mostly steady; slight upside risk if weather concerns intensify.
• India (New Delhi FOB non‑basmati & basmati): Stable in EUR, with a mild downward bias on competitive pressure and a firm rupee cap.
• Vietnam (Hanoi FOB 5% broken & fragrant): Slightly softer tone after recent easing in 5% broken quotations, but largely range‑bound near current EUR/kg levels.