Arabfields, Jamel derbal, Senior Correspondent: Innovation & Sustainability, Singapore — Thailand’s rice export sector, once a cornerstone of the country’s agricultural economy, is heading toward a significant contraction in 2026. According to projections released by the Thai Commerce Ministry in late December 2025, shipments could fall as much as 12.5%, bringing the total volume down to approximately 7 million metric tons compared with an estimated 7.88 to 8 million tons expected for the full year 2025.
The primary factor behind this anticipated downturn is the remarkable appreciation of the Thai baht, which has strengthened by 10.5% against the US dollar over the course of 2025. This makes the Thai currency the second-best performing in Asia this year and has pushed it to its strongest level against the greenback in more than four years. While a strong currency benefits importers and tourists visiting Thailand, it severely undermines the competitiveness of export-oriented agricultural products, rice being the most emblematic case.
Arada Fuangtong, head of the Department of Foreign Trade, was unequivocal during a recent press conference: the baht is currently 10 to 20% stronger than the currencies of Thailand’s main rice-exporting competitors. This gap translates directly into higher dollar-denominated prices for Thai rice on international markets, making it increasingly difficult to compete with the abundant and significantly cheaper supplies coming from India, the world’s dominant rice exporter.
The situation is made even more challenging by the structural changes that have occurred on the global rice market since mid-2024. India, after maintaining export restrictions for an extended period, gradually released large volumes of stocks onto the world market, exerting considerable downward pressure on international prices. At the same time, several traditional large buyers, most notably the Philippines, substantially reduced their import volumes or even temporarily suspended purchases, further shrinking the addressable market for Thai exporters.
The numbers already paint a sobering picture for the current year. During the first eleven months of 2025, Thailand exported only 7.3 million tons of rice, representing a steep 21% decline compared with the same period of the previous year. More worrying still, the value of these exports fell by 30.3%, reflecting both the lower volumes and the sharp drop in average export prices compounded by the currency headwind.
Despite this difficult environment, 2025 will still end on a relatively resilient note. Strong demand in the final weeks of the year should enable Thailand to reach between 7.88 and 8 million tons, comfortably surpassing the official target of 7.5 million tons initially set for the year. This performance, however, remains well below the nearly 10 million tons achieved in 2024, when Thailand still held its position as the world’s second-largest rice exporter behind India.
Looking ahead to 2026, the outlook becomes markedly more pessimistic. Unless the baht experiences a meaningful correction, Thai rice will continue to struggle to find buyers in a market that remains well-supplied and highly price-sensitive. The Commerce Ministry has repeatedly emphasized that the currency should be both competitive and stable, a combination that appears increasingly difficult to achieve in the current macroeconomic context.
Thailand is not standing still in the face of these challenges. The government continues to nurture certain strategic bilateral channels. A long-term arrangement with China remains one of the most solid pillars, with the existing deal for 500,000 tons expected to be renewed and possibly expanded thanks to robust political and economic relations between the two countries. Similarly, the recently concluded five-year agreement to supply up to 100,000 tons to Singapore provides a small but valuable guaranteed outlet in Southeast Asia.
These targeted deals, however, will not be sufficient to offset the broader loss of competitiveness in the open market. The structural surplus in global rice availability, combined with persistently low international prices and a strong baht, creates a particularly unfavorable environment for Thai farmers and exporters in the coming year.
Beyond the immediate horizon of 2026, several longer-term dynamics will influence the trajectory of the sector. The next government, which will take office following the early February 2026 elections, will face intense pressure to address the very low farm-gate prices that have generated widespread discontent among rice farmers throughout 2025. Calls for stronger government intervention, whether through direct purchases, price guarantees, or enhanced export promotion programs, are likely to grow louder.
At the same time, the prolonged strength of the baht reflects deeper economic forces, including relatively high interest rates maintained by the Bank of Thailand, substantial capital inflows attracted by the country’s political stabilization efforts, and the perception of Thailand as a safe haven compared with some of its more volatile regional neighbors. Reversing this appreciation without jeopardizing overall macroeconomic stability represents a delicate balancing act for policy makers.
In conclusion, the year 2026 is shaping up to be one of the most challenging for Thai rice exports in recent memory. The combination of an exceptionally strong currency, abundant global supply, depressed international prices, and shrinking demand from several key traditional markets is creating a perfect storm for the sector. While targeted government-to-government agreements offer some protection, they cannot replace broad-based competitiveness on the world market. The coming months will test the resilience of Thailand’s rice industry and will likely force both the private sector and the authorities to rethink the country’s long-standing export model in an increasingly difficult global environment.
