Physical rubber prices in Thailand are expected to rise further and remain high over the next two weeks because of monsoon weather in major growing areas in the south, traders and officials said on Monday. Smoked rubber sheet prices have more than doubled from $1.1 per kg in December 2008, the lowest in nearly seven years, to $2.60 per kg on Monday.
Torrential rain in Thailand's southern region since early November has caused flooding in several areas, including Hat Yai in Songkhla province, which has been declared a disaster zone, said a senior official at the Agriculture Ministry. Thailand is the world's biggest rubber producer and Hat Yai is the country's rubber trading centre.
"The central rubber market is still open, but rubber output coming to the market has dropped as much as 50 percent," said a trader at Hat Yai. Only around 15 tonnes of rubber sheet is being traded at the Hat Yai rubber centre per day, down from 30 tonnes normally, a local trader said. Around 5.5 million rai, or around 800,000 hectares (2 million acres), of rubber land has been hit by rain and flooding, which has disrupted tapping and hampered transportation, traders said.
Other southern provinces hit by the monsoon were Phatthalung, Nakhon Si Thammarat, Narathiwat and Pattani. Those provinces account for roughly 90 percent of Thailand's annual production of around 3 million tonnes of rubber.
"We expect rubber supply to rise gradually and get back to normal by mid-December if the rain stops within a few days," said a provincial agricultural official, adding that farmers needed time to tap rubber latex, then dry and process it into smoked rubber sheets. Unsmoked rubber sheet (USS3), a raw material for export-grade rubber sheet (RSS3), was at 80 baht per kg on Monday, up from last week's 78 baht, traders said.