Thailand, Indonesia ‘Comfortable’ on Rubber Price

Thailand, Indonesia ‘Comfortable’ on Rubber Price

Jan. 19 (Bloomberg) -- Thailand, Indonesia and Malaysia, the world’s three biggest rubber producers, view the current price as appropriate and agreed to take steps to counter any negative trends.
“Everyone is very happy,” Bernard Dompok, Malaysia’s plantation industries and commodities minister, said today after meeting counterparts in Kuala Lumpur. “Current prices of rubber are conducive for production of more rubber.”
Futures more than doubled last year, the best performance since at least 1976, on optimism that a recovery from the worst global recession since World War II would fuel demand for tires and gloves. The three countries will continue to monitor supply and demand and take suitable measures to counter negative price trends, according to a joint statement after the meeting.
“This would have a positive psychological effect on the market,” Rewat Yenchai, an analyst at AGROW Enterprise Ltd., said by phone from Bangkok. “It will help reduce price volatility and limit the downward fall in prices.”
Before the meeting, Apichart Jongskul, secretary-general of Thailand’s Office of Agricultural Economics, had said the three nations may agree at today’s session to support prices if they fall to less than $2,600 a metric ton. Still, Dompok said that “we don’t see the need to look at the threshold prices.”
Thailand, Indonesia and Malaysia harvest about 7 million tons a year, 70 percent of world natural-rubber output.
Global Supply
When Vietnam joins the three countries in the International Tripartite Rubber Council, total production would increase to 76 percent of global supply, while exports will rise to 93 percent from 84 percent, Dompok said.
“Vietnam, being the fifth-largest producer of natural rubber in the world, would strengthen the cooperation among major natural rubber producers,” he added.
The three countries also do not see the need to re-impose export cuts “for the moment,” Dompok told reporters.
The supply-management program run by the three countries had contributed to the improvement in prices, said Bayu Krisnamurthi, Indonesia’s Deputy Agriculture Minister.
Last year, the three producers put on hold plans to curb exports as the global economic recovery boosted prices and demand, the International Rubber Consortium Ltd., which represents growers and exporters, said Oct. 27.
Export Cut
The export cut was implemented after prices fell to 99.8 yen a kilogram ($1,098 a metric ton) in December 2008, the lowest level since August 2002.
Yen-priced futures climbed as much as 2.8 percent to 303.1 yen a kilogram on the Tokyo Commodity Exchange today, nearing a 16-month high of 306 yen on Jan. 15, before ending at 299 yen.
“We will monitor the market very closely,” Krisnamurthi said. “Our main interest is to ensure the rubber prices are attractive to small farmers as well as to others in the industry.”
Rubber will probably maintain an upward trend as key producers showed no intention of increasing shipments, Takaki Shigemoto, an analyst at research and investment company JSC Corp., said by phone from Tokyo.