Thailand's rice export association lowered its annual target from 10 million to 9.5 million tonnes on Monday, due to a slowdown in the global economy and fears that drought in Thailand could slash output for the year.

Chukiat Opaswong, honorary president of the Thai Rice Exporters Association, said Thailand would face a tougher export market due to a global slowdown in trade and fluctuating exchange rates.

He added that concerns over the drought on Thailand's rice production have boosted export prices and could drive buyers to Thailand's competitors.

The wet or monsoon season is under way, but Thailand is contending with drought conditions in six out of 67 provinces, according to the National Disaster Warning Center, and water rationing is taking place in almost a third of the country.

Farmers in Thailand, the world's second-biggest exporter of the grain after India, are growing increasingly desperate and in some provinces are fighting over precious water.

Chukiat said Thailand exported 4.3 million tonnes of rice as of June 20.

"In the first half of the year we thought we could export 4.5 million tonnes but by June 20 we were at 4.3 million tonnes," Chukiat told Reuters.

"We are still waiting for the full first half figures but our target for the year was 10 million tonnes and if you take several factors into consideration we expect it to be lower," he said.

As a result of the drought, the Thai government has lowered its forecast for this year's main rice crop by more than 2 million tonnes, according to a report this month by the Office of Agricultural Economics.

That has driven up demand on domestic markets, enabling the government to sell 1.15 million tonnes at its latest tender, a bigger volume than in other recent offerings.

Buying has picked up from African countries who fear prices will go up soon because of drought and lower output, said one Bangkok-based trader.

"The African market remains an important market for Thailand especially rice and parboiled rice," said Chukiat.