Oil price drop pulls crop prices down

Meanwhile, the bank says its special savings bonds that went on sale yesterday had been well received by investors, increasing the likelihood of a second bond issue. 

BAAC president Lak Vajananavat said the government had yet to specify the amount of credit that will be available to farmers. However, it is possible that up to Bt200 billion will be needed in addition to the Bt60 billion already extended to alleviate production costs for farmers, including rubber growers. The sharp decline of global crude-oil prices has further weakened the prices of agricultural goods, and contributed to the volatility of rubber and palm-oil prices. 

The BAAC is ready to assist the government within its liquidity capacity and capabilities, apart from regular agricultural loans. The Cabinet has indicated that it would like the bank to help upstream and midstream farmers to the extent allowed by applicable laws and regulations, Lak said. 

Assisting the agricultural sector is necessary, as it contributes up to 10 per cent of Thailand’s gross domestic product and employs 40 per cent of the country’s labour force, Lak added. 

US investment bank Goldman Sachs has lowered its projection for crude-oil prices for this year to US$47.15 per barrel from a previous forecast of $73.75, and for 2016 to $65 a barrel from $80 in the earlier estimate.

Meanwhile, five banks yesterday sold less than 10 per cent of the Bt100 billion worth of “May We All Be Happy” government bonds offered in the first day. The five-year bonds issued by the BAAC were more popular than the Finance Ministry’s 10-year bonds. 

The BAAC issued Bt50 billion worth of five-year bonds with a coupon rate of 3.8 per cent per annum. The state-owned BAAC sold only its own bonds, while the four major commercial banks – Bangkok Bank, Krungthai Bank, Siam Commercial Bank and Kasikornbank – sold both the BAAC and Finance Ministry bonds.

According to the Public Debt Management Office, about Bt7 billion worth of the bonds sold yesterday, mostly the BAAC bonds.

The BAAC reported bond sales amounting to Bt870 million. Krungthai Bank sold Bt2.19 billion, of which Bt1.3 billion were the BAAC bonds and the rest the Finance Ministry’s.

KBank sold more than Bt1.1 billion, of which Bt670 million were BAAC bonds. 

The bond will be available until January 23.

At present, the government has Bt490 billion in total liabilities related to helping farmers, which it has to repay to the BAAC. About Bt150 billion is due for repayment this year. The current bond issue is aimed at raising some of the necessary funds.