Hot, dry conditions that are delaying the planting of Thai summer corn are seen keeping prices firm as nervous feed millers stock up on the grain and keep supply tight, traders said on Tuesday.
Exporters are having trouble-finding buyers because of high prices. Traders say they've seen no new deals this month.
"The corn supply is getting tight. We could see a shortage of supply by June," said Thavee Tantiponganand of Tanyaphan trading firm.
Domestic corn, a major ingredient in poultry feed, was at eight baht/kg ($202/tonne) on Tuesday, up from seven baht/kg last week. It was only five baht/kg last month.
Only a few traders offered to sell corn in the domestic market on Tuesday amid strong demand from feed millers.
"Most feed millers are desperate to buy as much corn as possible to keep in their reserve stocks. They are worried that there will be a shortage in coming months," said one corn trader.
Drought has delayed the planting of the 2004/05 crop, which usually takes place in March, and would push the harvest back beyond August, traders said.
Some rain had been seen in some corn-growing areas this week, but not enough to encourage farmers to start planting the crop, corn traders said.
Thailand is not normally a major corn exporter, but surging demand from elsewhere in Asia, notably South Korea and Malaysia, in the early part of the year combined with excess supply in Thailand, where the bird flu had lessened domestic demand for feed, driving corn exports sharply higher.
Between January 1 and April 25, Thailand exported more than three times as much corn (604,856 tonnes) than it did in all of 2003.
Demand for feed was expected to remain weak as Thailand delayed its plan to declare the country free of bird flu on Tuesday after a new outbreak of the virus was found, traders said.
The outbreak has hit chicken exports as poultry exporters have stopped raising new chickens after the epidemic was confirmed on January 23, traders said.
"The Thai poultry sector will return to normal and overseas buyers resume imports only when it is declared that Thailand is free of bird flu," said one trader.
Some chicken raisers have been restocking in areas not hit by the bird flu outbreak, but only for domestic consumption, traders said.
Before the epidemic, Thailand raised about 20 million chickens a week and exported most of them to Japan and the European Union, both of which have banned imports of Thai frozen chicken products.
The poultry sector in Thailand accounts for about 55 percent of commercial feed consumption. Trade official's estimate Thailand's feed demand could fall to around nine million tonnes this year due to the bird flu outbreak, from last year's 11.49 million tonnes.