Thailand to start cutting rubber exports from Oct.

Tuesday, 28 August 2012 02:21 - - {{hitsCtrl.values.hits}}

BANGKOK

(Reuters): Top rubber producer Thailand will cut exports by 10 percent a month for six months from October, an industry official said on Monday, after agreeing with Indonesia and Malaysia to boost benchmark prices that are the lowest since late 2008.

“The government is authorised by law to control exports and has allocated fewer export quotas to companies that amount to a total drop of around 10 percent, or around 25,000 tonnes, per month,” Prapas Uernontat, president of the Thai Rubber Association, told Reuters.

Prapas said the government would review the export cut when it expires on March 31.

Thailand, Indonesia and Malaysia are the world’s top three rubber exporters, accounting for 70 percent of global rubber output, and all three agreed this month to cut exports by a total of 300,000 tonnes to shore up prices.

The prices of benchmark Thai smoked rubber sheet (RSS3) are currently around $2.95 per kg, a sharp drop from the record high of $6.40 per kg hit in February 2011 and the lowest since $1.10 per kg reached in late 2008.

Thailand’s Deputy Agriculture Minister Nattawut Saikuar is due to visit Jakarta this week for talks about other possible measures to support prices.

Traders said Indonesia and Malaysia had yet to announce any export cuts.

“At this moment, I don’t see any announcement from the government or from the rubber association about export restrictions. We can sell rubber at prices that we are satisfied with,” said a Jakarta-based trader.

“They could announce some measures later, but at this moment there is nothing,” added a trader in Malaysia.

In addition to export restrictions, Thailand’s government is implementing a scheme to buy rubber from farmers at above-market prices to help boost rural incomes.

The scheme, however, is making rubber too expensive for some exporters, who signed deals to sell at cheaper prices. Buyers wanted prices to fall to around $2.80 per kg, traders said.

“We can’t afford rubber at such high prices. We would suffer losses as we are committed to deals at prices cheaper than current levels. We may need to delay shipments eventually,” said a trader in Thailand’s Hat Yai rubber centre.

In Indonesia, traders were also seeking lower prices. Indonesian block rubber grade (SIR20) was offered at around $1.16-$1.20 per lb, but buyers traded at only $1.15 per lb. Only big dealers who had lower costs could meet deals, traders said.