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Short Summary
Thai rice prices are trading at a sharp premium over other Asian origins despite weak global rice markets. Expectations of a 500,000-tonne export deal with China and a stronger Thai baht have lifted prices, even as Indian rice remains significantly cheaper due to record stocks and intense competition.
Thai Rice Prices Gain Despite Weak Regional Markets
While rice prices across South Asia are hovering at multi-year lows, Thai rice is trading at a premium of over $70 per tonne compared with other origins. Two key factors are driving this divergence: ongoing talks for a large export deal with China and the appreciation of the Thai baht against the US dollar.
China Export Deal Lifts Market Sentiment
Thailand is in negotiations to finalise a government-to-government agreement to export 500,000 tonnes of rice to China. Since talks began, Thai rice prices have climbed by nearly $30 per tonne, touching around $430 per tonne.
This price rise has raised doubts within the trade about whether China will accept the higher levels. However, some market participants believe China may still proceed, as the purchase is likely aimed at rebuilding strategic inventories rather than short-term price optimisation. Concerns over possible La Niña-related production risks in Southeast Asia are also supporting China’s interest.
Currency Strength Adds Further Price Pressure
The strengthening of the Thai baht has further pushed export prices higher. Historically, Thai rice prices increase by about $15 per tonne for every one-baht appreciation against the US dollar.
The currency movement has already delayed the execution of an existing 100,000-tonne contract scheduled for January–March. Overall, Thai rice prices rose by about 15 per cent during the December quarter.
Structurally, Thai rice carries a $15–20 per tonne quality premium, along with an additional $15 per tonne logistics premium. Current prices exceed these levels due to expectations surrounding the China deal.
Quality and Access Keep China Buying Thai Rice
Despite Indian rice being priced far lower, China continues to source rice from Thailand due to quality preferences and quota access. Thai 5 per cent white rice suits consumption patterns in southern and coastal China, while Thailand enjoys smoother quota access than India.
China’s rice imports are guided by broader objectives such as managing domestic prices, maintaining adequate stocks, and geopolitical considerations, rather than price alone.
Export Performance Remains Weak
Thailand’s rice exports have declined sharply this year. Between January and October, shipments fell 24 per cent in volume and 36 per cent in value, dropping to 6.42 million tonnes worth $3.74 billion, compared with 8.44 million tonnes worth $5.64 billion a year earlier.
Chinese imports of Thai rice have been inconsistent, with volumes of 770,000 tonnes in 2022, 460,000 tonnes in 2023, and 430,000 tonnes in 2024. Imports could rebound to around 750,000 tonnes this year. Overall, China’s total rice imports have fluctuated between 1.6 million and 2.6 million tonnes since 2023.
Indian Rice Prices Stay Under Pressure
Indian rice prices continue to hover near $350 per tonne, weighed down by surplus stocks and aggressive exporter competition.
The Food Corporation of India is holding 31.19 million tonnes of rice and 39.38 million tonnes of paddy, equivalent to 26.38 million tonnes of rice, taking total stocks close to a 10-year high. Production is expected to hit another record of 151 million tonnes in the current crop year ending June 2026.
The lack of sustained efforts to position Indian rice as a premium product and intense price competition among exporters continue to cap prices.
Conclusion
Thai rice is currently trading at a premium on deal-driven optimism and currency support. Whether this premium holds will depend on the successful execution of the China export agreement and currency trends. In an oversupplied global rice market, price support remains vulnerable if either factor weakens.