Fortnightly Rubber Situation in Thailand – June 2013

1-15 June 2013

It comes to the 6th month of the year, rubber price is still likely to shrink due to the slowing global economy. Investors in Japanese, Chinese and Singaporean rubber market resort to other assests like stocks and property market with high yield dividend. Currently, RSS3 price is at 78 baht/kg. Hence, there seems to be no room for rubber price to climb up to 120 baht/kg as earlier expected.

16-30 June 2013

The rice mortgage scheme of the government has obviously shown the sign of failure. It is expected that tax valued 1.2 hundred thousand baht levied from Thai citizens lost. The rice scheme is a good example for rubber price intervention scheme in which the government buys rubber at higher-than-market price to stockpile and sell when the price is high. Intervention in price system should be performed in short term as/when necessary by considering all sided effects. Additionally, it should be done with appropriate price. Simultaneously, the government shall seek other approaches to overcome falling price in a sustainable way through cost reduction and productivity enhancement, research and development promotion, domestic value-added consumption promotion, promotion of additional career to earn extra income for rubber growers and social welfare promotion for rubber growers affected by falling price for their survival.

The real price intervention is based on demand and supply basis – automatically run. With good economic condition, consumer confidence and purchasing power is strong, buyers can easily sell off their products. At the moment, the economy of U.S., Europe and even China is slowing. With rubber in mainly consumed in tyre manufacture and car is luxury good, car sale is directly affected by the slowing global economy. This dampens demand of rubber raw material.