Thai rubber prices lower

Thai rubber prices were lower in sluggish trade on Wednesday, but they are not expected to dip further as domestic supplies are tight, traders said.
Thai RSS3 rubber sheet was offered at $1.33/kg FOB for May shipment, down from last week's $1.35. Thai STR20 was at $1.30/kg FOB, versus last week's $1.32/kg FOB.
"The market is dull. Overseas buyers are not buying yet. They think the price will come down," said one trader.
"They expect the wintering season to be over in a month, so they are waiting."
Thailand, the world's top producer and exporter of natural rubber, is in the wintering season (February-April), when leves fall off rubber trees and latex output declines.
Rain that normally arrives in mid-April, ending the dry wintering season and boosting rubber supplies. Rain helps nourish trees and boost latex output.
Prolonged dry heat can dry the trees out, cutting latex output.
The price of Thai unsmoked rubber sheet grade 3 (USS3), the raw material for export-grade rubber sheet, was steady on Wednesday at around 49 baht/kg ($1.24/tonne).
Indonesia's SIR20 was offered steady at $1.25-1.26/kg FOB, versus last week's 1.28/kg FOB. Malaysia's SMR20 was steady at $1.30.
Only a few deals have been done this week. "We have heard that one deal has been clinched at $1.27/tonne FOB for RSS3 rubber sheet for May shipment," said one trader.
The government's plan to boost rubber output by 17 percent by 2009 has been implemented, exporters and officials said.
Under the plan, Thailand has permitted an increase in the amount of land that can be used to grow new rubber trees in the north-east and north by 160,000 hectares (400,000 hectares).
Thailand had restricted rubber plantation to two million hectares (five million acres), mainly in the south and east. "Farmers are now preparing to plant new rubber trees in May," an Agriculture Ministry official said.
It will take around five years before new trees start-producing latex. Under the plan, Thailand would raise annual exports to 2.8 million tonnes from around 2.4 million tonnes now.
Thailand's key buyers are Japan, China and the United States.