Rice Output in Thailand to be Smallest in Eight Years, FAO Says

June 29 (Bloomberg) -- Rice production in Thailand, the largest exporter of the grain, may drop to the lowest in eight years as drought and the spread of plant hoppers damage crops, according to the Food and Agriculture Organization.

The nation’s main rice crop, which accounts for about 75 percent of total output, may be 22 million metric tons in the year starting October, the smallest since 2002, said Concepcion Calpe, a senior economist at the United Nations’ agency.

“We’re still maintaining our relatively downbeat forecast for rice production,” she said in a phone interview from Rome.

Falling supplies may drive the price of Thai 100 percent grade-B white rice, the benchmark for Asia, to $500 a ton by the end of the year, Banjong Tungjitwattanakun, vice president of the Thai Rice Mills Association said last week. The price has risen from a two-year low of $469 on June 9 as a strengthening local currency makes exports expensive.

Rough-rice futures have tumbled 32 percent this year on the Chicago Board of Trade. September-delivery futures declined 1.2 percent to $10.09 per 100 pounds at 12 p.m. Singapore time.

The Thai government last week advised farmers to postpone planting to the end of July because of delayed rains and warned of possible crop damage after the weather office said there may be heavy rains and flooding in September and October.

This is the second time this year the Thai authority has asked farmers to delay planting as the El Nino weather pattern reduced rainfall. The main rice crop is usually planted in May and harvesting begins in October.

Plant Hoppers

“Drought is undoubtedly a matter of concern in many countries now,” FAO’s Calpe said. Thailand must also contend with the spread of the brown plant hoppers, she said.

Still, total rice output, including that from the nation’s second crop, may be 30 million tons in 2010-11 season, compared with 29.8 million tons estimated in the current year, said Calpe.

“We do not forecast a dramatic drop in production because it’s possible to see a recovery in the second crop,” she said. “More than one crop is produced every season. The sector has much scope for making up an earlier shortfall by planting more subsequently.”

The forecast doesn’t take into account possible damage from heavy rainfall, Calpe said.

“We can’t predict about the worst circumstance unless we have evidence,” she said.

To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net

To contact the editor responsible for this story: James Poole in Singapore at jpoole4@bloomberg.net