Thai Cassava and Its Derivatives Production and Export Affected by Droughts

Thailand is the third largest producer of cassava after Nigeria and Congo. Despite being the world's largest market for cassava production, production in Africa is mainly for domestic consumption. In contrast, Thai production is focused on overseas markets. Thus, Thailand is known as the world’s largest exporter of cassava, with an export reaching USD 2.2 billion in 2022. However, Thailand's cassava for this current season is facing significant challenges resulting in a production and export decline.

Weather anomalies are one of the key driving factors in the production of Thai cassava. In 2022, the production of Thai cassava decreased by 3% YoY to 34.1 mmt due to flooding from the Noru storm in Sept- 22. Some of the cassava crops were damaged and could not be harvested. Moreover, Thai cassava crops in 2022 also experienced spotted leaf disease, which was further decreasing the output.

In Q1-23, the Thai market had the highest supply of cassava due to consistent rains which was favorable to the crop. It is predicted that in Q1-23, Thai cassava will reach 60% of the supply projected for 2023. Thai cassava exports in Q1-23 also reflected an increase of 35% YoY to 2.2 mmt.

Although the first quarter of 2023 showed a promising increase in cassava production and export, the situation took a turn for the worse after March due to drought conditions which have been causing a decrease since Mar-23. In Apr-23 and May-23, Thai cassava exports significantly decreased by 55% YoY to 0.9 mmt. Overall, in the first five months of 2023, Thai cassava exports decreased by 16% YoY to 3.1 mmt.

Source: ITC Trademap

Drought conditions compelled some farmers to cultivate sugar cane instead of cassava. Thailand's cassava root production is estimated at 32.8 mmt this year, a decrease of 4% YoY. This is a significant setback from the output projection of 40 mmt in 2023. The shift has limited cassava supply, contributing to increased demand and higher prices. The FOB price for Thai cassava in Jun-23 was USD 570/mt, an increase of 6% YoY.

The decrease in cassava supply has also affected the production of derivative products, such as cassava starch (tapioca). With millers receiving less cassava for processing, cassava starch output has fallen, resulting in an increase in its FOB price to USD 565/mt in June 2023, up by 4.6% MoM.

Source: Thaitapioca

Prolonged droughts forecast further challenges for Thai cassava and its derivatives. Weather conditions and farmers' switch to other crops are expected to exacerbate supply shortages of cassava and its derivative products, leading to elevated prices. Thai cassava and tapioca FOB prices are expected to reach above USD 590/mt for this current season. Despite the supply shortage, the overall quality of the Thai market in this current season is good. Farmers have been advised not to rush harvesting small and unsuitable cassava roots during periods of high prices. This precaution aims to maintain the overall quality standard to be exported.