Fortnightly rubber situation in Thailand – July 2013

1-15 July 2013

Minister of Agriculture and Cooperatives in charge of rubber is planning to ease inventory stockpiles of over 200,000 tonnes under the rubber price intervention scheme. Certain amount of rubber is cup lump of which quality becomes inferior due to direct sunlight. The price bought is higher than market price i.e. 100 baht/kg while current market price stays around 70 baht/kg. There is also additional cost during the stockpile i.e. inventory and risk cost. This scheme will go in vain if it could not achieve the target price.

On the supply side, scattered thundershowers in southern Thailand did not considerably affect tap-ability of rubber growers. In addition to the South, rubber plantations in the North and North East contribute to high supply accumulation of the country, affecting already low rubber price to decline further. Rubber growers shall keep in mind the effect of oversupply and note that no other mechanisms can defeat market mechanism.

16-31 July 2013

The hay day of Detroit – the largest and most successful automobile hub of USA has now come to an end, partially due to automobile industry slump, definitely affecting rubber prices. Its bankruptcy can be compared to a falling giant. As everybody may have known, most of rubber raw material is consumed in automobile manufacture. Once the automobile giant goes bankrupt, rubber price is inevitably affected, giving further pressure to already low prices.

At the moment, rubber growers all over the country gather for a mass rally to bring the government’s attention to the plummeting price of rubber. On 24 July 2013, around 2,000 representatives of Rubber Growers Cooperatives Society of Thailand moved to Songkhla Town Hall, urging the government to exercise any measure against falling price and determine minimum price as such: 101 baht/kg for RSS3, 92 baht/kg for USS3, 81 baht/kg for farm latex and 83 baht/kg for cup lump. Within 15 days, the society representatives will push pressure on the government if nothing is implemented. In this regard, the ministry assigned Farmer Council to arrange a consultative meeting with rubber growers for opinion towards falling price solution, prior to proposing in the meeting of Natural Rubber Policy Committee.