Thailand, the world's biggest rubber producer and exporter, said on Thursday it was seeking concerted action with fellow producers Indonesia and Malaysia to stabilise falling rubber prices. Slower growth in major economies and worry about Europe's debt crisis has hit rubber demand and led to falling prices in recent months. That has sparked sporadic protests by farmers in Thailand demanding government intervention.
Thailand hopes co-operation between the world's top three producers can shore up prices, Thai Deputy Agriculture Minister Nattawut Saikuar told Reuters. "I had a discussion with the Indonesian trade minister last night. We agreed that rubber prices had fallen to an inappropriate level and we needed to do something to prevent them from falling further," Nattawut said in an interview.
"I also plan to go to Malaysia in early June to talk about this issue with the Malaysian trade minister." Indonesian is the world's second-biggest producer and Malaysia is the third-biggest. The big three rubber producers account for about 70 percent of global natural rubber output.
The price of Thai unsmoked rubber sheet stood at 99 baht on Thursday, falling in line with the benchmark grade smoked rubber sheet (RSS3) and Tokyo rubber futures prices, which sets the global trend. Tokyo rubber futures prices fell to a 6-month low at 257.9 yen per kg, the lowest level since November 24 because of renewed concern about Euro zone's debt woes.
Traditionally, the three Southeast Asian rubber producers choke off supply by cutting down rubber trees to prop up prices. They have in the past worked together to support the market, most recently in December 2008 as physical rubber fell as low as $1.10 per kg when global recession loomed. At that time, they agreed to cut exports by a total of 915,000 tonnes in 2009 to prop up prices.
In the event, the export restriction plan was never strictly enforced as the market started to rebound from mid-2009, largely because of demand from tyre companies in China and India. Nattawut said the Thai government would step up its existing intervention scheme and buy more rubber to push up the price of unsmoked rubber sheet to a target of 120 baht ($3.76) per kg.
Thailand sees 2012/13 main rice crop at 24m tonnes Thailand has bought only a fraction of the 200,000 tonnes of rubber sheet it planned to purchase under a government intervention programme, failing to boost prices, government and industry officials said on Tuesday.The government had approved a 15 billion baht ($474 million) budget in January to buy rubber from farmers in a bid to push up unsmoked rubber sheet (USS3) prices to above 120 baht per kg.
But prices have continued to fall with the current 100 baht per kg even lower than January's 115 baht."It is the complicated authorisation process that slowed down the buying programme, plus unfavourable weather that cut supply. That's why we haven't been able to buy much rubber so far," said Wit Pratuckjai, director general of the Office of the Rubber Replanting Aid Fund (ORRAF).Thailand - the world's biggest rubber producer and exporter - implemented the intervention plan in early May, with the delay mostly due to the government's decision to buy from local rubber co-operatives, not from individual small farmers.
The government has bought only 4,300 tonnes so far.Local administrations had to set up sub-committees to select which co-operatives would be qualified to join the intervention programme, which took up to a few months."The programme did not achieve much in terms of pushing up prices as the channel it used to buy rubber was too small, buying from local co-operatives only," said Prapas Uernontat, president of the Thai Rubber Association.Farmers have demanded that the government accelerate its purchases to support prices by buying from individual farmers as it did with rice. However, there has been no immediate response from the government.Wit said the government was expected to buy more rubber in June, when the weather was likely to be fine, allowing farmers to tap more latex.
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