Malaysia and Indonesia will further reduce rubber output by a combined 115,000 tonnes this year by replanting more rubber trees, government ministers from the two countries said on Wednesday. The additional measures come as rubber prices struggled to rise due to the spreading global economic crisis and mounting fears over the financial and auto sectors.
Malaysia's Commodities Minister Peter Chin said the country, the third largest producer of rubber, would increase replanting to 50,000 hectares this year from 32,000 hectares previously. Indonesia, the world's No 2 producer, would replant 55,000 hectares, Agriculture Minister Anton Apriyantono said.
"Both countries are now implementing measures to accelerate replanting of rubber trees aimed at managing the supply of natural rubber," both ministers said in a statement. "This joint measure is expected to reduce a total of 115,000 tonnes involving 60,000 tonnes from Malaysia and 55,000 tonnes from Indonesia."
Thailand, the top producer, has not yet announced new replanting measures although the government had plans last year to cut the area covered by rubber trees that are more than 25 years old by 64,000 hectares. The new moves reinforce initial plans by the top three producers in December to take 915,000 tonnes of rubber out of the market in 2009, or a sixth of their combined exports of 5.5 million tonnes in 2007. All three Southeast Asian countries started to implement export cuts of 270,000 tonnes in the first quarter of 2009.
Key Tokyo rubber futures ended up more than 2 percent on Wednesday, supported by a recovery in oil and share prices on assurances by Federal Reserve Chairman Ben Bernanke that the troubled banking sector would be protected. Apart from producing rubber, Indonesia and Malaysia are the world's top palm oil exporters and recent non-tariff barriers by major importers like the European Union and the United States were hampering prices and demand, the ministers said.