Producers agrees to manage supply, to stabilise prices

Thailand, Indonesia and Malaysia, which supply around 67% of the world's natural rubber, have agreed to manage NR exports to the global market to ensure there is no excess supply and also agreed not to expand new rubber planting areas beyond targets set earlier and to boost domestic rubber consumption by 10% annually.

Rubber associations from Thailand to Cambodia have this year urged producers not to sell the commodity below a minimum price of $1.50 per kg, while Thailand later approved a subsidy plan worth around $1.8 billion to support farmers. Thai government kicked off the program four days ago for rubber growers nationwide. Rubber planters in the southern province of Satun-Thailand have received the assistance fund from the government to compensate their losses from dropping rubber prices. Each planter is entitled to a compensation of 1,000 baht per rai, with no more than 15,000 baht per household. These measures will help global rubber prices recover from their lowest levels since 2009, but they remains under pressure from slower Chinese demand.

The International Tripartite Rubber Council (ITRC) Ministerial Committee Meeting 2014, chaired by Malaysia, is expected to set up a regional rubber market within 18 months as one of the corrective measures to stabilise rubber prices. The regional rubber market will merge the markets of the main natural rubber producing countries providing better price discovery and effective hedging functions to benefit producers, consumers and market players.

The benchmark RSS4 grade rubber closed at `.117 a kg at Kottayam, while RSS3 grade closed at `.101.82 a kg at Bangkok and Malaysian SMR20 closed at `.95.09 a kg. On National Multi Commodity Exchange December 2014 futures closed at `.115.85 a kg, January 2015 at `.115.94 and February at `.116.66 a kg. On Tokyo Commodity Exchange, November 2014 futures series closed at ¥189.6 a kg, December at ¥195.6, January 2015 at ¥199.1, February at ¥201.9, March at ¥204.5 and the contract for delivery in April 2015 closed at ¥206 a kg. On Friday, most probably Tocom futures contract for delivery in April 2015 may trade between ¥201 & ¥207 a kg.