Rising demand for food pushes up exports

Exports in August expanded by 7% as demand grew for Thai agricultural and food products, thanks to the increased purchasing power of trading partners.
Poonpong Naiyanapakorn, director-general of the Trade Policy and Strategy Office, said exports in August increased by 7% to US$26.2 billion (940 billion baht), driven by demand for agricultural and agro-industrial products, as well as industrial products, supported by global climate fluctuations and the recovery of the service sector in key markets.
Shipments in the real sector, excluding gold, oil-related products and weaponry, increased by 4.3% for the period.
The EU’s economy has started to recover from inflationary pressures, which increased consumer purchasing power and revived demand for Thai products.
Another positive factor was the reduction in shipping costs, particularly for routes to the US and Europe, which reduced exporters’ costs and enhanced price competitiveness.
Imports in August increased by 8.9% to $25.9 billion, resulting in a trade surplus of $265 million.
In the first eight months of 2024, exports increased by 4.2% to $197 billion, while imports expanded by 5% to $204 billion, resulting in a trade deficit of $6.3 billion.
Exports of agricultural and agro-industrial products increased by 17.4% year-on-year to $4.73 billion in August, the second consecutive month of growth.
Products that expanded included fresh, chilled, frozen and dried fruit; rice; rubber; canned and processed seafood; pet food; and animal and vegetable fats and oils.
In contrast, shipments decreased for tapioca products; sugar; fresh, chilled and frozen chicken; and canned and processed vegetables.
Exports of industrial products increased by 5.2% year-on-year to $20.4 billion, the fifth consecutive month of growth.
Shipments expanded for automobiles, equipment and auto parts; computers, equipment and parts; rubber products; machinery and mechanical components; chemicals; telephones, equipment and parts; and air conditioners and parts.
Meanwhile, shipments of other industrial products declined, such as internal combustion engines and parts, circuit boards, and semiconductors, transistors and diodes.
Mr Poonpong said exports are expected to rise this year by 1-2% to $290 billion, or 10 trillion baht.
Shipments could exceed the 2% upper limit if demand for Thai agricultural products increases, as more trade partners seek food security because global climate fluctuations are affecting production in many countries, he said.
However, there are risks that could pressure exports, including high geopolitical uncertainty, continued appreciation of the baht, and the possibility of domestic floods affecting agricultural production, said Mr Poonpong.
Chaichan Charoensuk, chairman of Thai National Shippers’ Council, said there is high risk for the remainder of the year given the rapid baht appreciation, which will weigh on negotiations for products to be delivered in November and December.
The baht’s appreciation is expected to continue until the first quarter of 2025, he said.
Most domestic firms engaging in international trade have hedged against foreign exchange risk, given the baht’s strength, said Mr Chaichan.
Exporters who sold in advance from July to August, particularly for agricultural products, may have liquidity problems as they receive less money back in baht, he said.
Regarding the government’s planned daily minimum wage hike to 400 baht, Mr Chaichan said exporters would like a postponement because it will increase production costs, affecting the agricultural and service sectors, such as logistics, wholesale and retail, as well as small businesses, which are suffering from the baht’s appreciation.