Rising oil threatens Thai food producers’ margins

Maybank keeps the sector at neutral.

Thai food producers are likely to face higher production costs as rising oil prices lift fertiliser costs and trade bottlenecks threaten to push up agricultural prices, according to Maybank.

The broker said the pressure could intensify in the second half of 2026 as an anticipated El Niño-driven drought lifts corn and other farm input costs, although it does not expect a sharp commodity rally because it assumes the Iran conflict will last weeks rather than months.

Maybank said Thai Union Group faces the biggest downside risk to gross profit margin if the conflict drags on, whilst Charoen Pokphand Foods and GFPT could also come under pressure if higher fertiliser prices during the April to June US soybean planting season tighten crop yields and lift soybean meal prices.

It said CPF and Thai Union were the most exposed to higher raw material costs based on their ability to pass through costs and net profit margin levels, whilst i-Tail Corporation was the least exposed because of its cost-plus pricing model, stronger pet food demand, and the highest net profit margin amongst peers.

Maybank kept ITC as its top pick for the sector.

The broker said near-term pressure should remain limited because feed prices, including corn and soybean meal, were still low as of 18 March, and most producers typically hold several months of inventory.

Despite this, the firm maintained a neutral stance on Thailand’s food sector, citing the risk that prolonged conflict and weaker demand could squeeze margins by limiting companies’ ability to raise prices.