Thai government considers suspension of rice farming in central region to save water amid drought, Bangkok Post reports, citing Surasri Kidtimonton, secretary-general of the Office of the National Water Resources.

Rainfall this year has been lower than average triggering an expectation of drier rainy season

Hardest areas will likely to be the central provinces, which is considered the country’s main rice growing region

Region may face 40% drop in accumulated precipitation this rainy season, likely causing widespread water shortages

Water levels are also at low level at four main dams including Bhumibol in Tak province and Sirikit in Uttaradit province

Eoin Treacy's view

Pressure on rice harvests across India, Pakistan and now Thailand have the potential to be a potent source of inflation in the region over the next several months. That’s not good news for regional central banks that were hoping to be able to ease policy.

Rough Rice continues to firm and posted another higher reaction low yesterday. I remain of the view recovery potential is looking more likely than not and particularly as an El Nino weather pattern becomes more established.  

Significant flooding in northern China suggests scope for additional wheat demand later this year. For now, wheat prices are declining because Ukraine is successfully negotiating export routes through neighbouring countries.