(Adds performance this year in seventh paragraph.)
June 19 (Bloomberg) -- Rice prices in Thailand, the world’s second-biggest exporter, will probably extend their gains because of shipping delays as migrant workers flee after the military coup, the Thai Rice Exporters Association said.
As many as 70 percent of the workers involved in loading grain at warehouses and moving it to vessels have left the country, Chookiat Ophaswongse, the association’s honorary president, said by phone from Bangkok yesterday. That could delay deliveries by as much as three weeks, he said.
Thailand is set to account for 22 percent of global rice exports this year, U.S. Department of Agriculture data show. More than 200,000 workers from neighboring countries left Thailand since the military seized power on May 22 amid fears of a crackdown on illegal labor, according to the International Organization for Migration. The military denies ordering such a move. Thai rice prices have increased to a three-month high.
“We’re now facing problems of severe labor shortages and tight supplies, which will boost prices in the short term,” Chookiat said, predicting that rates may increase by as much as $20 in the next two months. Thai 5-percent broken white rice, an Asian benchmark, climbed for a third week yesterday, adding 1.5 percent to $398 a ton.
A supply shortage after the military halted sales from state stockpiles is also bolstering rates, Chookiat said. The army stopped sales and curbed movement of grain to review the quality and quantity of reserves built up through a state buying program started in 2011. Inventories rose to 14 million tons from 5.6 million tons three years ago, USDA data show.
Ample stockpiles in Thailand and competition from Vietnam will curb gains, said Kiattisak Kanlayasirivat, a Bangkok-based director at Ascend Commodities SA, which trades about 500,000 tons of rice annually. “As prices rise, demand for Thai origin slows. Buyers will seek cheaper sources like Vietnam.”
While prices for 5-percent broken white rice increased for the past three weeks, they have declined 9 percent this year because of excess supplies in Thailand and India.
“Only about 500 tons of rice a day can be loaded now, compared with 2,000-3,000 tons normally,” Kiattisak said, referring to grain bought from Thai exporters for shipment to Africa. “I’ve never seen such slow loading before. The shipment could be delayed by a month.”
The National Council for Peace and Order, as the junta is known, aims to solve the problem of illegal workers, Air Chief Marshal Prajin Juntong, the head of economic affairs, said on June 17. The council expects migrant labor will return to Thailand because of high demand, he said.
Workers load bags from warehouses onto lighters and onto vessels at ports, said Sermsak Kuonsongtum, director of Chaiyaporn Group, an exporter, and association vice president.
The loading rate is about 300 tons a day now compared with 1,500 tons normally, Sermsak said by phone from Bangkok.
The country has a migrant worker population of 2.23 million, including 1.82 million people who entered the country illegally, according to the Department of Employment. Of the total, 1.74 million are from Myanmar, 395,000 from Cambodia and 96,000 from Laos.
--With assistance from Chris Blake in Bangkok.