Thai rubber prices are expected to rise over the next week, supported by tight domestic supplies and strong overseas demand, exporters said on Wednesday. The price of unsmoked rubber sheet grade 3 (USS3), the raw material for export-grade rubber, has risen over the past week as supplies of raw materials fell, they said. USS3 was 42.29 baht per kg ($1.10 per kg), up from Tuesday's 42.08 baht.
It was between 40 and 41 baht last week. "The wintering season has already arrived in southern Thailand and that has cut supply," said Trite Opaswongse of the Hay Churn exporting firm.
"It came about a month than usual." In the wintering season, which usually starts in the south in March and runs through to May, temperatures soar, leaves fall and latex output declines, on average by 30 percent.
The leaves begin turning yellow before wintering starts. Good rain helps nourish trees and boosts latex output but prolonged dry heat can dry the trees out and reduce the amount of latex.
Thai RSS3 rubber sheet was at $1.25 per kg, free on board, FOB for March shipment on Wednesday, up from last week's $1.20/kg. Thai STR20 block was $1.25 per kg for March shipment, up from last week's $1.22 kg.
Malaysia's SMR20 block was $1.25/kg and Indonesia's SIR20 block was $1.21/kg. Thailand, Indonesia and Malaysia account for 60 percent of the world's natural rubber.
Thai exporters said they had sold forward contracts only through to April shipment at $1.25 per kg FOB. "We are reluctant to offer further. We are worried about supply," said one exporter in the southern town of Hat Yai.
Thailand is the world's biggest producer and exporter of natural rubber. Its leading buyers are Japan, China and the United States. About 90 percent of Thailand's natural rubber are produced in the south.
"We expect supply to tighten further and prices firm during the wintering season. But it is very difficult to predict the level the price would go up to," said Trite. "Exporters cannot take too many risks by selling long forward contracts without having raw materials supply in hands first."